Landmark repossession ruling holds Scottish lenders to ransom

Landmark repossession ruling holds Scottish lenders to ransom



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The repercussions of a Supreme Court’s landmark ruling that all lenders must issue a calling-up notice before repossession will continue to affect business in Scotland.

The Scottish government has decided not to reverse current court proceedings for mortgage hearings, despite the fact that most respondents to the government’s consultation would support this approach.
As a result, it is now more time-consuming for a lender to obtain possession in Scotland than in any jurisdiction of the UK, as they must serve a calling-up notice and then wait two months before they can start court proceedings for repossession.
Kennedy Foster, Council of Mortgage Lenders (CML) policy adviser for Scotland, said: “It is disappointing to find that, even though the majority of respondents to the consultation agreed with our views that there would be negative, long-term implications from this judgment, the Scottish Government have decided to do nothing. 
“While the industry waits for the Scottish Law Commission's review of this area in the next couple of years, borrowers and lenders will face adverse consequences through higher costs and extensive delays."
The Supreme Court’s landmark decision was made in November 2010 over RBS v.s. Wilson case.
RBS had tried to repossess the homes of Francis and John Wilson without a calling-up notice after the brothers ran up debts of £50,000.
It was claimed that the Wilsons did not understand the bank’s warning letters and didn’t realize that they were being given a legal warning.
Judges made the decision that all lenders should have to issue calling-up notices, and this decision was upheld by the Supreme Court.
However, according to the CML, both lenders and borrowers will suffer as a result. They stated: “Both existing and future borrowers who are served with calling up notices are likely to experience delays and the associated costs, most notably through contractual interest, brought by the new process.
“It is difficult to understand how the serving of the calling up notice provides any additional protections to the borrower. A calling up notice under the 1970 Act requires to be served on the borrower and will require repayment of the principal amount owed plus interest and expenses within a 2 month period from the date of the Notice. The borrower will already have been informed by the lender within 15 days of going into arrears of the level of outstanding arrears and the total amount due with this information being effectively duplicated by the calling up notice.
“The lender will also have used reasonable efforts to try to come to an arrangement with the borrower regarding repayment of the arrears. It is hard to see any additional benefit of 2 month period required by the calling up notice.”

2 Comments

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    Morris

    Stop lending in Scotland? How do you think this would go down to the customers of Scottish Banks in Scotland? Lead Balloon perhaps?

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    James

    Not a problem. It's perfectly simple, stop lending in Scotland! After there is uproar, it won't take long before a senior judge overrules this nonsense. A lender has a fundamental right to protect their interests, without the law making it even harder.

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