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that is of course the line the bank will trump out. Proportionality is the key here and did the bank, by their intervention force the breach or escalate the breach into a more serious technical insolvency?

there are many mortgages out there with a 80% L2V convent. Therefore the mortgagee, whilst still in positive equity and still making repayments may be technically in breach if the bank commissioned a valuation that showed that the L2V was now 85% or 95%. By your argument it is off with their heads. I would argue that it would be totally unreasonable to do that. However banks use such things to place people on higher rates (as if that will help the borrower).

Its the same for business. In such a instance, the programme tells us business were placed in GRG, 'to help them'. however control of payments was taken away from the companies. Increased fees and enhanced security was obtained.

Was that right? you decide.

But this is business to business (B2B), there is no consumer protection. The 80% LTV example is not the same at all. A normal residential customer (NOT BTL) wouldn't be expect to have the same knowledge as a business. It is assumed a business takes professional advice, that they as a commercial entity took advice to protect the entity because they haven't the same protection as joe blogs.

You are comparing apples with oranges.

This business, that it is assumed has have an understanding of basic contract law as they form them regularly through trade, should be aware of the repercussions of breach of loan covenants. A judge would have expected them to take advice. Any sane person would not hold a resi customer (NOT BTL) to the same standard as a business customer.

Is that right? Well it's just the way it is.

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But this is business to business (B2B), there is no consumer protection. The 80% LTV example is not the same at all. A normal residential customer (NOT BTL) wouldn't be expect to have the same knowledge as a business. It is assumed a business takes professional advice, that they as a commercial entity took advice to protect the entity because they haven't the same protection as joe blogs.

You are comparing apples with oranges.

This business, that it is assumed has have an understanding of basic contract law as they form them regularly through trade, should be aware of the repercussions of breach of loan covenants. A judge would have expected them to take advice. Any sane person would not hold a resi customer (NOT BTL) to the same standard as a business customer.

Is that right? Well it's just the way it is.

I believe the law is the same on breach regardless of whom the borrower is. Ignorance is rarely an acceptable excuse anymore. The banks go out of their way to inform private borrowers that their home is at risk if they do not keep up payments etc, etc.

If anything a business, who employs people and has trade debtors has an equal right to individual borrowers to be treated fairly by the lenders. I don't think the programme was questioning the banks ability or right to enforce its security and as you say the business, which would be classified as a 'sophisticated investor', should be more than aware of the possible implications and increased risk when falling foul of any of the covenants associated with any facility.

The programme however was implying that the bank had a role in either forcing that business into a breach position and/or via the banks further direct actions further intensifying that position into a technical insolvent position where the bank then enforced its security and effectively took the company down leaving the trade debtors with nothing. No one is questing the banks right to enforce its position and business should be very aware of the banks willingness and at times having little option to but to do just that.

The programme was not disputing that and neither am I. But the program and the Tomlinson Report, upon which it is based upon were both saying much, much more; and I quote;

"there are circumstances in which the banks are unnecessarily engineering a default to move [on] the business"...(page 2)

"Once in this part of the bank, the business is trapped with no ability to move or opportunity to trade out of the position – they are forced to stand by and watch an otherwise successful business be sunk by the decisions of the bank"..(pge 2).

"the findings of the report do clearly show heavy handed, profiteering and abhorrent behaviour of some of the banks towards businesses." (page 19) Tomlinson Report 2013

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I believe the law is the same on breach regardless of whom the borrower is. Ignorance is rarely an acceptable excuse anymore. The banks go out of their way to inform private borrowers that their home is at risk if they do not keep up payments etc, etc.

Actually it isn't the same, a consumer and a business wouldn't be judged in the same light. There's various consumer protection legislation and requlations that do not apply to B2B lending and transactions.

Ignorance is rarely an excuse but making this statement and thinking it makes the previous statement "I believe the law is the same on breach regardless of whom the borrower is" also a fact, is a fallacy.

The banks go out of there way to do those things for private individuals because they have to. The same does not apply to business. A consumer will have an easier time proving a loan is "misssold" than a business will simply because a business is expect to take advice.

If anything a business, who employs people and has trade debtors has an equal right to individual borrowers to be treated fairly by the lenders. I don't think the programme was questioning the banks ability or right to enforce its security and as you say the business, which would be classified as a 'sophisticated investor', should be more than aware of the possible implications and increased risk when falling foul of any of the covenants associated with any facility.

A business should be treated fairly, no one is disputing that. The business was in breach of its lending covenants, the banks enforced the contract. That is fair, that was mutually agreed by both parties. That’s an example of a functioning contract.

The programme however was implying that the bank had a role in either forcing that business into a breach position and/or via the banks further direct actions further intensifying that position into a technical insolvent position where the bank then enforced its security and effectively took the company down leaving the trade debtors with nothing. No one is questing the banks right to enforce its position and business should be very aware of the banks willingness and at times having little option to but to do just that.

The programme was not disputing that and neither am I. But the program and the Tomlinson Report, upon which it is based upon were both saying much, much more; and I quote;

"there are circumstances in which the banks are unnecessarily engineering a default to move [on] the business"...(page 2)

"Once in this part of the bank, the business is trapped with no ability to move or opportunity to trade out of the position – they are forced to stand by and watch an otherwise successful business be sunk by the decisions of the bank"..(pge 2).

"the findings of the report do clearly show heavy handed, profiteering and abhorrent behaviour of some of the banks towards businesses." (page 19) Tomlinson Report 2013

I haven't had time to read the report on RBS but I will.

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I haven't had time to read the report on RBS but I will.

The point is the programme explained this and had a interview with the author who explained his findings. He believed the bank were engineering the default, in some cases to allow them to enforce. This was the whole point of the programme and if true I believe most reasonable people would consider it at the very least unjust.

Edited by BelfastVI
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  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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