bank have lost loan agreement

[chester123]

Our bank overdraft and loan have been called in(apparently local branch have been doing this to lot of old loyal customers) and we are in process of opening new accounts and new business loan. New bank are happy and very confused as to why old bank called in loan as its always been paid and we offered to pay in full once property was sold. We have asked for more time from old bank to finalise all details and copy of loan agreement. It appears bank have lost agreement so I assume they cannot come after us for balance of loan if they have lost the contract. Under normal circumstances we would honour the loan but the bank have been completely unsympathetic to stress they have caused to ourselves and business .The last thing we want is bad credit so need some advice as to whether we can offer full and final payment with no damage to our credit .

 

[Vectis]

You obviously have your own copy of the agreement?

 

[chester123]

somewhere I would imagine ! cant find it at moment

 

[The Resolver]

Whilst, in the absence of the actual document or a copy of it, they may not be able to fully prove the detail of the terms of the loan,(eg precise charge/fee/interest rates and how and when can apply etc) they will still be able to prove that the loan was made and that monies are owed.

I suggest you negotiate a settlement on a 'full and final' basis as you say (allowing for any complaints you may have eg damage and cost from the sudden withdrawal and any historical complaints) . If they accept your offer (make sure it is marked 'without prejudice and subject to contract' until you have a signed settlement agreement) , then the debt is fully extinguished and they cannot post bad credit. But you must be sure the settlement agreement fully covers you.

The bank of a client of mine in a similar dispute has also lost the loan agreement. It could be common and thus it may always be worth asking if they have it (or a copy).

 

[chester123]

Thank you this is just what we have been considering.We have been with same bank for over 30 yrs and the old manger has left and staff told us new manager is pulling alot of loyal clients accounts. We had a letter of confirmation this morning that documents are lost .

 

[vickitcs]

Is it a CCA regulated loan? If it is, then you might be able to use Consumer Credit Act 1974 (Sections s77-79) , which stops banks from pursuing repayment. There is a bit of disagreement as to whether this applies to business accounts, although I know that when I worked for a large UK bank, they did not differentiate between business and non business - they just applied the ruling according to if it was CCA regulated or not. However, even if they agree that they won't continue to demand payment, you may find that it is still recorded on your credit file.

 

[chester123]

Im sure it is cca regulated loan.It is a business account, Im playing bit of waiting game at moment we still have some time to make offer . I noticed that if they cant come up with contract copies after 12 days it influences debt decision !!!the bank have sent me letter stating they cant find documents !!.

 

[vickitcs]

I know when I was with RBS/Natwest, they sometimes recreated them if they had enough data to do so, but I don't know where they would stand with that really from a legal standpoint!? Is the loan unsecured?

 

[chester123]

no its secured and same bank ... 30 yrs loyal service !!

 

[vickitcs]

Oh I'm afraid that is a different matter then. You could try putting an official complaint in and escalating to the ombudsman once you get a final response from the bank. It could be worth a try to see if you can get some compensation for the inconvenience and also distress that the situation caused, but the bank most likely has a clause in the terms and conditions giving them the right to withdraw the facilities at any time. Sorry!

 

[chester123]

its already in ombudsmans hands, will have to see if lack of contract makes a difference but thanks. It appears we were late on two occasions and bank have made knee jerk reaction, we have two properties for sale and they just wouldnt wait until one was sold to make full payment or change loan until we could clear all payments .

 

[Alan R Price]

As Graham says, the fact there is no written documentation does not mean there is no contract, or that it is unenforceable. A contract can be inferred from the conduct of the parties (e.g. they paid or transferred a significant sum of money to you, and you have been making monthly payments to them ever since), and it can also be verbal. The fact there appears to be security will also be evidence of the loan. The charge document, while probably not recording the exact terms of the loan, will usually state that the charge is given in consideration of moneys lent.

 

[The Resolver]

Is it a CCA regulated loan? If it is, then you might be able to use Consumer Credit Act 1974 (Sections s77-79) , which stops banks from pursuing repayment. There is a bit of disagreement as to whether this applies to business accounts, although I know that when I worked for a large UK bank, they did not differentiate between business and non business - they just applied the ruling according to if it was CCA regulated or not. However, even if they agree that they won't continue to demand payment, you may find that it is still recorded on your credit file.

The OP says it was a business loan and therefore ,if the debt is more than £25,000, does not have the protection of the CCA. S16B is clear on that. (for others - the Act prevents enforcement if the creditor does not provide the Agreement to the debtor) .

 

[chester123]

thanks Graham we will be in contact with you shortly , there has been some improvement in our situation and we have had offer on one of properties. Unfortunately we cant meet dead line but might be able to make some kind of offer on condition sale goes through.Ill find out more by wednesday and we trying to re negotiate a new mortgage on jointly inherited property.