Broker’s fee excluded

Southern Pacific Securities 05-2 plc v Walker and another [2010] UKSC 32, TLR 12 July

A loan agreement stated that the amount of credit was £17,500. That did not include the broker administration fee of £875 on which interest was to be paid at the same rate as on the £17,500. The total amount financed was therefore £18,375. The borrowers contended that it followed from the fact that the total amount of the loan was £18,375 that the amount of credit was in that sum and that, applying the truth in lending principle, it was wrong to describe the amount of credit as £17,500. It was agreed that if the agreement contained a term correctly stating the amount of credit, it was enforceable, whereas if it did not, it was irredeemably unenforceable.