Loan Lenders Warned Against Suing Borrowers Outside of Legal Jurisdiction

Mon, 21 Jun 2010

The Office of Fair Trading (OFT) has told banks and lenders that they should not sue defaulting customers under the laws of parts of the UK which are different to the laws where the borrower lives. The warning was issued after Belfast based Creation Consumer Finance planned to sue Scottish borrowers in English courts – a move which the OFT said would have been ‘unfair’, and may prevent consumers from defending themselves, either due to an unfamiliarity with the different legal procedures, or to the long distances they would have to travel in order to defend themselves.

Creation told its lawyers to stop pursing the case once the OFT issued the warning – a warning which the regulator has extended to all loan lenders . As such, in the event of a borrower defaulting on any form of credit – whether a personal loan, payday loan, credit card debt or overdraft borrowing – lenders wishing to take them to court must do so in the borrower’s own legal jurisdiction. The warning also states that banks and lenders are responsible for the actions of third parties acting on their behalf.
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