Personal Guarantees
23rd June 2011
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You couldn't make it up -- unless you are a bank

Lenders routinely mislay the card and loan agreements their customers originally sign; however more astonishingly, if there has been a dispute later on, the lenders have used computer software to "recreate" the original documents, sometimes with less than accurate results. Being able to recreate agreements in this way helps banks pursue borrowers over debts, but there is growing evidence that when lenders "recreate" contracts they often do not stick to the original terms. The result is that borrowers who are often already in financial trouble are left in worse difficulties. Document "recreation" is in the spotlight after a court case last month involving a number of borrowers with credit cards issued by HBOS, Barclaycard, MBNA and HSBC. Part of the case, was to assess the circumstances in which banks could "reconstitute" lost agreements. Judge David Waksman concluded that in future, lenders would have to explain why they did not have the original agreements. He said they would have to prove that the recreated document was a true copy of the original contract.
The Office of Fair Trading circulated banks and other lenders, driving home the message that "any reconstituted copy must be a true copy, containing any terms and conditions contained in the original, and giving the terms and conditions applicable at the time the contract was signed."
The result of this is that the banks have yet more hoops to jump through, making it more likely that they will make mistakes, only benefiting the case of the personal guarantee holder.

About the Author

Stefan W

Member since: 16th September 2011

My name is Stefan Wilkinson and I deal with the mis-selling of financial products
Mis–selling is more widespread than you might have realised
I believe mis – selling is wrong and needs highlighting...

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