Recreated paperwork could cause problems for borrowers

According to a recent report many lenders tend to misplace or lose loan and credit agreements, and in some cases this paperwork is even disposed of, which means that if and when the banks need to refer to the agreement for any reason they are having to recreate the agreement. Whilst this is not frowned upon there is one problem that has been highlighted, and this is the fact that the recreated document often has discrepancies that leave the consumer even worse off.

In some cases there has been a dispute over the credit between the creditor and the borrower, and even in some of these cases lenders have had to recreate the document in order to deal with the dispute. In a recent test case at the High Court in Manchester the judge agreed that lenders could use recreated documents in place of the originals, but added that they would have to prove that the recreated document was a proper copy of the original and did not differ in its terms and conditions.

Officials have said that recreating documents in this way means that lenders are able to pursue borrowers that are trying to escape their debts, but that there is evidence that the recreated document is not always a true copy of the original. This has left many borrowers that are already struggling in an even worse situation. Later this month the Office of Fair Trading will circulate guidance amongst lenders reiterating that any recreated documents must be a true copy of the original.

A consumer credit lawyer stated recently: ‘It’s only fair that banks are allowed to rely on copies of documentation if, say, a fire resulted in the loss of their files. But we regularly come across significant discrepancies-between the terms of an agreement a borrower actually signed and the “recreated” one presented by lenders to the court.’

Tags: debt, Mortgage loan, consumer credit lawyer, High Court, credit, office of fair trading, Banking, personal finance