Recent cases have come to light where Lending Institutions have sought to unilaterally change the method of calculation of the interest rate and therefore unilaterally alter the rate of interest to be charged on the customer’s loan, contrary to the terms of the Loan Agreement and at a significant expense to the customer.
In doing so, the Lending Institutions seek to rely on a provision that is usually contained in their Standard Terms and Conditions which allow them to vary the interest rate and/or method of calculation at its discretion. This may, for example, be used when a Lending Institution is seeking to compensate for losses elsewhere in its business.
This is especially relevant in cases where the Loan Agreement states a specific method of calculation and rate of interest which the customer replies upon and which may have induced the customer to accept the Loan Offer in the first place.
The terms of the Loan Agreement generally cannot be changed unilaterally by the Lending Institution or the customer. Any attempt by the Lending Institution to do so may be illegal if not provided for in the terms of the agreement itself.
In certain limited circumstances it may be that the Loan Agreement specifies an agreed interest rate and/or basis of calculation, which provision supersedes the Lending Institution’s Standard Terms and Conditions. There are legal remedies available to customers affected by such action by Lending Institutions. This includes issuing proceedings for damages for breach of contract, negligence, breach of duty and/or misrepresentation.
If you believe that your lending institution has breached the terms of your loan facility, please contact either Sam Saarsteiner or Karen O’Brien in our Litigation Department on (01) 6344680 or by email (email@example.com or firstname.lastname@example.org) to speak with us in confidence.