UK Asset Resolution: Consumer Credit Act
(Limited Text - Ministerial Extracts only)
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The Economic Secretary to the Treasury (Harriett Baldwin)
I can today update the House following previous statements on 11 December 2012, Official Report, columns 20-21WS, and 11 December 2014, Official Report, columns 52-53WS, on the Consumer Credit Act (CCA) litigation case undertaken by NRAM plc (formerly Northern Rock (Asset Management) plc). I can now confirm that following the High Court judgment in December 2014 and the subsequent decision taken by the boards of UK Asset Resolution (UKAR), the NRAM holding company, and UK Financial Investments (UKFI), to pursue an appeal, the Court of Appeal overturned the High Court judgment in July 2015 and found in favour of NRAM. The Court of Appeal confirmed that customers who took out unsecured loans of more than £25,000 under agreements that incorrectly stated these loans were regulated under the CCA are not entitled to the same rights and remedies as those customers who took out loans that were regulated under the CCA. The UKAR statement is available at: http://www.ukar.co.uk/media-centre/press-releases/2015/23-07-2015?page=1
UKAR had estimated the cost if it had to remediate affected customers to be £279 million plus any future interest accruing on these accounts before remediation is made. A provision for this amount was included in the Treasury group accounts and following the Court of Appeal judgment this provision has been removed.
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