You may recall that a group litigation consisting of some 1,482 individuals was presented to the courts in London on the grounds that the loans underwritten by Clydesdale Financial Services Ltd trading as Barclays Partners Finance were illegal on the grounds that the broking intermediaries were not authorised by the Financial Conduct Authority (FCA).
The applicants’ references to the Tribunal resulted from a Validation Order made by the FCA on 5 February 2018 whereby the authority had determined that it was just and equitable to enforce 1,444 regulated credit agreements (“the Regulated Agreements”) that had been made between the applicants and Clydesdale Financial Services Limited, trading as Barclays Partner Finance (“BPF”), a company wholly owned by Barclays Bank PLC. The Regulated Agreements financed the acquisition by the applicants of timeshare accommodation from a group of companies known as “Azure”. At the time of the references a total amount in the region of £47 million was outstanding under the Regulated Agreements.
The Decision
Having re presented the case to the tribunal, the FCA initial decision was, for the most part, upheld, much to the disappointment of the group litigation clients, however all is not lost. All individuals with loans outstanding will no longer have to pay interest and also the FCA has ruled that all previous interest payments be refunded. A further stipulation is that an independent assessor will be appointed to review whether the information provided at the point of taking out the loan was accurate and would have affected the decision as to the granting of the loan in the first place. In particular:
- The affordability assessment was adequate in line with the FCA rules and expectations for that consumer.
- The assessment was adequate in addressing affordability rather than just credit risk.
- Where BPF is unable to satisfy the authority of 1 and 2 above then a refund of all payments made to date, cancel the Agreement and pay 8% simple interest.
- Where 1 & 2 have not been met to remove any adverse entries on the consumer’s credit file in relation to the agreement.
We believe the fact that all interest payments have been cancelled and will be refunded to be a very positive step in the right direction, however, as it stands there is still a requirement to repay the loan principal pending the decision of the assessor.
The Future
Leading law firm M1 Legal who have been representing a number of claimants are naturally disappointed with the outcome of the case but are of the opinion that it is a worthy partial victory for claimants, a spokesman said that as the decision by the FCA have now published, it’s certainly good news for our clients with BPF loans. Whilst there is still a requirement to repay the capital borrowed, the removal of interest will substantially reduce monthly payments. The fact that BPF have also been required to repay interest paid to date means that some of the older loans may be able to be extinguished with the return of interest.This decision alone could mean tens of millions of pounds of interest being wiped off of timeshare owner loans thanks to the efforts and persistence of M1Legal.
The M1 spokesperson went on to say, the 20 page document has to be reviewed thoroughly before any definitive statement may be offered but initial thoughts are that there may be a possible appeal but given the length of time it took to reach this result from the original case presentation, if an appeal is lodged there is no expectation of a quick hearing or result.
Finally
If you believe that you have been affected by either the collapse of Azure or you have an outstanding loan with BPF we would love to hear from you. The door is far from closed.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk