Consumer credit—Fixed sum credit agreement—Prescribed terms

Southern Pacific Securities 05-2 plc v Walker and another [2010] UKSC 32
Supreme Court, 7 July 2010, Lord Hope (president), Lord Walker, Lord Brown, Lord Mance and Lord Clarke.

A broker administration fee may form part of the “total cost of the credit” for the purposes of s 9(4) of the Consumer Credit Act 1974 (CCA 1974), separate from the loan itself, even if the consumer is lent the fee at a rate of interest by the lender at the same rate as the loan.

Richard Mawrey QC, Adrian Salter and Matthew Richardson (instructed by Turner Coulston) for the appellants. Nicholas Elliott QC and William Edwards (instructed by Rosling King LLP) for the respondent.

The borrowers obtained a loan of £17,500 from the lender’s predecessor in title. The parties signed a credit agreement which, it was common ground, was regulated by CCA 1974. The agreement included a “Broker Administration Fee” advanced to the borrowers of £875. Interest was payable on the fee