The High Court has rejected a claim by borrowers against a bank
under s140A and 140B of the Consumer Credit Act 1974
("CCA") alleging that there was an unfair relationship
arising from (inter alia) the terms of loan agreements, which
agreements included 'basis clauses'. The decision is the
first reported case to consider the efficacy of basis clauses in
this context, but is also of broader interest in relation to the
steps that banks can take to ensure that basis clauses are
enforceable and therefore ultimately offer the intended
protection.
Background
The claimants (C) were two British couples resident in Spain. In
2005/6 they each borrowed substantial sums from the defendant bank
(D), to fund investments in an attempt to mitigate Spanish
inheritance tax. Each couple received advice on the investments
from an IFA (whom C do not appear to have sued). The loans were
secured against the investments themselves and C's Spanish
properties.
