Challenge banks over Unfair Loan and Credit Card Agreements before April 2007
This year, has not been a favorable one for the banks especially here in UK.
The banks are now facing a new challenge posed by the unprcedented discovery of thousands of unfair loan deals. According to Consumer Credit Act (1974), consumers can challenge the validity of their loans under the pretext of “unfair relationship test”.
If you have a personal loan with a current balance under £25,000, or had taken out loans before April 2007, you can be eligible to make unfair loan claims after appropriate scrutiny. With these unfair loan claims, the UK banking industry can lose billions of pounds in consumer debt. It has been estimated that a shocking 60% of personal loans are unfair and as per insurance experts, around 79% of the loans are vulnerable to full legal challenge.
The reason for this fiasco is because the banks may be receiving higher payments from their customers than the agreed values through incorrect wording or poor documentation. Financial compensation claims companies can evaluate the loan and credit card agreement and if they discover that the loans are unfair then you can process a claim. According to these compensation claims companies, if the loan documents are unfair, then consumers can sue the financial institution seeking compensation for the negative impact their unfair loan had on their credit score.
It is said that there is clear evidence which shows that a number of high street banks have as many as 30 loan agreements in force and most of them are unfair because they have not been rewritten from scratch rather they have been, “added to, altered, plagiarized, cannibalized and amended”.
There are number of factors which will effect the validity of a consumer claim. Following are some of these factors;
• Discrepancies in the total value of the credit owed
• Number of dues
• Rate of interest
• Frequency of repayments
If there are any drafting errors in the above listed areas then it will make the loan balance null and void. According to court’s rulings, such loans will automatically become ‘contingent liabilities’. This will have an extremely negative impact on the balance sheets of the banks especially in a situation where they expected to raise billions of pounds to fight liquidity.
There will be a deadline fixed before which the claims can be filed so that it does not remain open perpetually. Therefore consumers are advised to review their loan documents if they should have even the slightest doubt. In this scenario, banks have very little grounds to defend themselves. According to legal experts, if you have any Payment Protection Insurance taken along with your loan, then they will look to refund this too.
This problem could have been easily avoided if only banks were careful with their documentation. It is hard to believe that how some of the high street banks can be so unprofessional in their approach, which has lead to their own loss.
Please take a moment to visit Write Off Your Credit Card or Personal Loan Agreements. Take the two minute test and find out instantly if you qulaify.
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