In 2006, Parliament recognised that consumers were in need of more protection against lenders. This was due to immoral practices by lenders and brokers leading to unfair treatment of the customer. Consequently, an Unfair Relationship Claim can give you fresh grounds for complaint.
As a result, the Consumer Credit Act 1974 was amended to further support victims of mis-sold financial products.
How is an unfair relationship established?
An unfair relationship is found when a lender has mis-sold a financial product for personal gain. The relationship is established in the purchase of financial products such as mortgages or loans.
In many cases, lenders paid a commission to brokers who arranged the loans, which was added to the cost of the loan, even when the customer wasn’t aware and/or it wasn’t required by consumers.
If a customer has taken out a loan and the lender has not provided sufficient advice or disclosed how much commission they received, it’s likely that they have been mis-sold the product.
Unfair Relationship Claim test
One of the major changes in the Unfair Relationship provisions to the Act is the Unfair Relationship test. The test makes sure that the Courts can intervene if they find unfairness in:
- Any term of the agreement
- How the lender has enforced their rights under the agreement
- Any actions of the lender
If the relationship is found to be unfair by the Courts, the lender can be ordered to:
- Write off all or part of the loan
- Pay compensation to the borrower
- Do or not do something in relation to the agreement
Unfair Relationship provisions
The change ensures that the balance of power is in the consumer’s favour when making an Unfair Relationship Claim.
There are many examples of how the provisions can protect you, including if:
- A lender has paid a broker a large commission when securing a loan
- You incurred mortgage arrears and a lender applies unfair charges
- A lender has offered a loan on an interest-only basis and you have no means of repaying the capital
Do you believe your lender formed an unfair relationship with you and as a result, you lost money? You may be entitled to an Unfair Relationship Claim. Get in touch today to start your claim.