Rates of Interest and Enforceability of Consumer Credit Agreements: An “Interesting” Decision for Lenders

    April 2010

    Lenders will breathe a huge sigh of relief after His Honour Judge Tetlow's important decision in Brooks v Northern Rock (Asset Management) plc (formerly Northern Rock plc) [2010] was handed down earlier today. The main issues determined by the Court, under CPR 24.2, were whether an agreement regulated by the Consumer Credit Act 1974 (the "CCA 1974") must state the "nominal" (as the "Checker Report" prepared by claims management companies argued) or the "effective" rate of interest (which is used by the majority of lenders) and, if it did not state the correct rate of interest, whether that rendered the agreement irredeemably unenforceable. The Court's decision, put shortly, was that a lender may use and record any rate of interest.

    Northern Rock is a long standing client of Hammonds and we provided tactical and strategic advice throughout the life of this dispute and were delighted to bring it to such a satisfactory conclusion.