O Unfair Loan Relationships

Unfair Relationships - Sections 140A to 140C of the Consumer Credit Act 1974

It is important to appreciate that although these sections appear in the Consumer Credit Act 1974, they are not limited to consumer credit and apply to virtually any loan (other than some residential mortgages) of any amount made to any individual or group of individuals for consumer or business purposes. Thus even many loans which are exempt agreements for the purposes of most of the sections of the Consumer Credit Act 1974 are still covered by the unfair relationships protection. 

Sections 140A to 140C allow the court to look at the entire relationship between lender and borrower including anything done by the lender “either before or after the making of the agreement or any related agreement”. If the court decides that the relationship as a whole is “unfair” then the court has wide discretionary powers to discharge the loan or reduce the amount owing under it by any amount which the court considers appropriate. The court can also order the lender to make a payment to the borrower (for example refunding the fee charged for a related mis-sold service).

The wide scope of the "unfair relationships provisions" is illustrated by cases such as Harrison v Link Financial where the Mercantile Court discharged the outstanding debt because of the debt collection agency's behaviour in hounding the debtor with "non-traceable telephone calls", and Bank of Scotland v Singh a commercial loan case where the court ordered the bank to remove receivers and make the loan interest free during the 3 year period that the receivers had been unfairly appointed by the bank.


The above explanation of the law is only an overview and in order to be reasonably concise I have had to leave some details out - details which are likely to affect what the law would say about your own situation. So please do not rely on the above but contact me for advice 

This page was lasted updated in October 2016          Disclaimer