Borrowers may be protected from “unfair” loan contracts if the Office of Fair Trading wins its High Court battle with First National, starting this week.
The OFT is claiming First National contracts are “unfair” because defaulting borrowers can continue to be hit by interest charges even after they have been taken to court.
The case follows an incident involving a couple who discovered the interest charges on their £4,500 loan continued to accumulate even after First National had taken them to court for defaulting on their loan repayments. The court order said they owed £5,686, but First National demanded £8,700.
But the bank is claiming its contract clauses can be found at many of the UK's major lenders.