If a lender has no signed agreement from a customer, is the debt enforceable?

A question about : If a lender has no signed agreement from a customer, is the debt enforceable?

Hi,

Theoretical question.... honestly ;-)

Let's say a friend of mine. A REALLY GOOD FRIEND OF MINE, applied for a personal loan with a big lender in mid-January and the funds were paid (c.Ј16k) in to that person's account a few days later. That money was promptly spent on what the loan was taken out for in the first place...

Ok. Now fast forward to today (Feb 20th) and no direct debit payment has been taken from my friend's account.

So, he rings up the lender in question today and asks why they've yet to take any money from his account. They tell him that they have yet to receive any signed paperwork back from my friend. As such, the loan in question is actually still in application status, hence why they haven't paid out.
In fact, that particular application has now expired, so a if my friend wants the money they applied for then they will have to re-apply for it.

So... my friend plays dumb and says, ok, I'll look in to this and come back to you!

He has had the money, clearly. And spent it.
But as far as the lender is concerned they haven't paid out. And even if they could demonstrate that they have, by their own admission they aren't actually in possession of any signed agreement.

So, where does this leave my very, very good friend in terms of the loan being enforceable?

He's a good guy. He doesn't want to break any laws or jeopardize his immaculate credit rating and so on.

Best answers:

• Yes its still enforceable, there were changes in the CCA a good few years ago that removed the requirement for a physically signed credit agreement plus the lender only needs to be able to regenerate the agreement as it was at the time not actually produce the one sent to/ received back from the consumer
  Its belts and braces that lenders still ask for wet signatures in many cases
• Lol the immaculate credit rating means nothing.
• Bail-outs were not free tax payer money by the way, loans have to be paid back and shares in banks like Lloyds and RBS can be sold at a profit for the tax-payer
• Yes, I googled that just now (the change in the loophole re lenders no longer having to produce an ORIGINAL agreement) but my understanding from what i read was that they still had to produce a COPY of an agreement, as a minimum compliance with the consumer credit act.
  Source: EDIT (won't let me post links as new user - but google "moneywise, legal loophole partially closed, cut your debts")
  But if the lender in question is stating they have no agreement of any kind. And claim to have not even paid out, where does that leave my best buddy?
• Fair enough.
  Can anybody shed anything more legally minded and binding than personal opinion, though, please? Either way. perhaps with some precedent or source?
  I would have thought that for any lender to legally recall any debt, then at teh very least they would have to provide proof of an agreement. Whatever that may be.
  I wouldn't think that an unreasonable assumption/opinion either.
  Just trying to get proper clarity here.
• Suggestion: Use the money you would have paid against the loan into a savings account. Whilst they faff about getting themselves in order you collect the interest.
  When they eventually come calling you just pay back what you owe. If they don't send you an annual statement they won't be entitled to charge you any interest.
• So basically the bank made a mistake and paid Ј16k into your friend's account.
  They will figure it out and they will want it back. There is zero chance that your mate is going to get to keep this "free" money.
• If (what I am assuming is) your assertion is accurate, then it would be the same as a bank error in your favour erroneously crediting your account with Ј16k.
  If this was the case then as soon as the lender realises they are 'down' Ј16k they can ask for it back since there is a traceable route -the account it was credited to.
  Rhind v Commercial Bank of Scotland (1860)
  This is further touched upon more clearly in the 1968 Theft act.
  It states that: "A person is guilty of an offence if:
  (a) a wrongful credit has been made to an account kept by him or in respect of which he has any right or interest;
  (b) he knows or believes that the credit is wrongful; and (c) he dishonestly fails to take such steps as are reasonable in the circumstances to secure that the credit is cancelled."
  I think the absence of the paperwork being used as a reason to not at least make the repayments properly falls into the latter clause.
  The fact they do not have a paper trail showing a legal agreement isn't really a major issue, in fact it could be a hindrance to the debtor -since without evidence of an agreement between them both, the lender could demand an immediate repayment of the loan.
  In which case Stators advice is very good, provided it goes into an instant access account with reasonable interest (open a tesco current account for example).
  Of course I am not a fully qualified solicitor, but it's highly unlikely you'll get one of those giving advice on a free forum, so you can accept my advice or not.
• This is a minefield, and I'm hearing many differing opinions from here and from another forum also. very difficult to know what the hard and cold legalities really are.
  SO...
  * It's commonly agreed that a lender DOES have to provide a facsimile or copy of a signed agreement as the minimum compliance with teh CCA, in order to stake claim on a debt
  * They can't do that, by their own admission. And at this point they claim they haven't even made payment on this agreement.
  However, it doesn't take a genius to consider that eventually their P&L will have a Ј16k hole in it and will be picked up at some point.
  So, I think my friend should stick the Ј300 a month that was due to this lender in to a savings account for his kid.
  If and when the lender spots this gap in their accounts and comes a-knocking, then they can begin the process of legalities in the safe and comfortable knowledge that he has the funds to make all the payments owed, should the judgement fall against him.
  What you reckon? Reasonable strategy?
• I reckon the department he contacted hasnt recieved the paperwork yet and it will be there in a matter of course, and everything will be in order and this thread rendered pointless