Not upheld: enforceability of loan agreement and loan transfer complaint against Elderbridge Limited

Decision detail

Summary

Mr L and Mrs L complained that their secured loan with Elderbridge is unenforceable because they were not given a chance to review the loan terms and conditions before signing in January 2008. The loan was originally with lender F and transferred to Elderbridge in 2016. Mr L and Mrs L had previously complained about the transfer in 2017, 2018, and 2020, all without success. The ombudsman found that the right to transfer was explicitly permitted in section 13 of the loan agreement and that any complaint about the broker's conduct should be directed at the broker, not the lenders. The ombudsman determined it is fair and reasonable for Elderbridge to pursue the debt, as Mr L and Mrs L borrowed the money and have not repaid it, and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that the right to transfer the loan was explicitly set out in section 13 of the loan agreement, which Mr L and Mrs L signed. The loan transfer was therefore contractually permissible and normal industry practice. Any complaint about the broker not allowing time to review the terms and conditions should be directed at the broker, not the lenders, as the broker was appointed by and acting on behalf of Mr L and Mrs L, not the lender. The ombudsman noted that lender F had no regulatory obligation to replicate the broker's role. The ombudsman clarified that while only a court can determine legal enforceability, the ombudsman's role is to decide what is fair and reasonable, and it is fair and reasonable for Elderbridge to pursue the debt given that Mr L and Mrs L borrowed the money and have not repaid it.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website