Unfair Relationship Bridging Loan CA case

Mrs McMullon took bridging finance from Secure the Bridge Ltd (“STB”) having met Mr H., a part owner of STB, at a “wealth coaching” session run by him. During the coaching session various fact-find documents were completed by or for Mrs McMullon about her financial situation which were later shown to be materially inaccurate. STB then entered into an agreement with Mrs McMullon for a loan of £25,000 repayable over 3 to 4 months to help her improve her credit rating. It was intended that once Mrs McMullon’s credit rating had improved she would apply to re-finance by way of a re-mortgage of her property from a more established lender. However, her credit rating did not improve and she was unable to re-finance as planned.

An unfair relationship claim was brought on the basis of, inter alia: the connection between the wealth coaching company and STB through Mr H, the inaccurate fact-finding documents, alleged incorrect advice that the bridging finance would improve Mrs McMullon’s credit rating and alleged abusive telephone calls from Mr H. At trial all such allegations of unfairness were rejected. The Recorder found that, although the relationship between the wealth coaching company and STB was unusual, Mrs McMullon was well aware of the situation. Moreover, she was responsible for the inaccurate documentation, no advice had in fact been given about the loan improving her credit rating and the phone calls were heated but did not constitute targeted abuse as alleged.

These findings were appealed to the CA on three grounds: (1) There was a conflict of interest between the wealth coaching company and STB which led to the parties’ relationship being unfair; (2) Mrs McMullon could never afford to repay the agreement on the basis of her income unless she could refinance which, at the time of the agreement, was unlikely in light of her credit rating; and (3) the fact-find documents were knowingly and inaccurately completed by STB. Each of these were rejected by the CA, on the basis that the Recorder had reached his overall conclusion according to inferences drawn from having seen and heard from the witnesses at trial. The wide ambit of the unfair relationship provisions meant that the CA was not in a position to interfere.

However, the appeal was successful to the limited extent that the default interest charged by STB contravened s.93 of the Consumer Credit Act 1974. Accordingly, the amount of recoverable default interest should be limited to a total of £1,125 per clause 6 of the agreement.

Full copy of judgment available here.