Southern Pacific Mortgage Ltd v Heath
Court of Appeal 5 November 2009 [2009] EWCA Civ 1135

Jayne Heath owned a house in Worksop, which had a Halifax mortgage on it, worth about £19,000. She wanted to raise some capital and in 2002 was offered by another lender a loan of around £28,000, with £9,000 being released to her. The lender subsequently assigned the agreement to the respondent. At that time, this was an unregulated agreement, the regulated limit being £25,000.
Subsequently the consumer got into arrears, and the question of unenforceability was raised during repossession hearings.

The court was asked to assess the meaning of s.18 of the Consumer Credit Act 1974, which deals with multiple agreements. It was suggested that the loan fell into two different categories, part restricted-use and part unrestricted-use, and thus should be regulated, but the court disagreed, saying that this was a single loan which could only be drawn down as a single amount.

A copy of the full judgment is available here.

Comment: there seems to be a limited decision here, only relevant in these particular circumstances. If an unregulated loan consisted of two loans, one D-C and the other D-C-S (broker's fee or PPI), the total being above £25,000, then a more successful case might result.