The Court of Appeal has overturned the decision by the High Court which stated that when Northern Rock Asset Management, NRAM, and its predecessors repeatedly advised borrowers of loans over £25,000 that the loans were regulated by the Consumer Credit Act 1974, the consumers automatically became to benefit from the rights under the Act. The Court of Appeal has confirmed that the judge in the High Court erred in his conclusions.
This decision will be welcomed by the HM Treasury who stood to lose in the region of £258mln as a result of the original High Court decision. However, it’s bad news for the borrowers of sums exceeding £25,000 as they no longer have a claim for compensation.
Those who took out loan agreements of more than £25,000 which incorrectly stated that they were regulated by the Consumer Credit Act 1974, are not entitled to the same rights as those who took out loan agreements which actually were correctly regulated.
In April 2015 I provided a blog in relation to this case, the judgment of which had a potentially very expensive impact on HM Treasury, subject to the outcome of an Appeal which had been lodged by NRAM. The case of NRAM PLC v McAdam & Hartley  EWHC 4174 (Comm) sought to determine whether the use of standard loan agreement documentation which referred to agreements being regulated by the Consumer Credit Act 1974 (“The Act”), meant that the loans which were not regulated, (by reason of the loans being over £25,000), still had to comply with the rules and regulations under the Act.