The FOS and ''Unenforceable'' agreements

[Amethyst]

Unenforceable agreements are a legal issue and as such shouldnt be taken through the financial ombudsman, however it appears people are doing so, and even more worryingly - claims management companies and advice agencies are doing so...

We have received a number of complaints during the year from consumers who believe their loan agreements may be “unenforceable at law”.
Because the ombudsman service is not a court, we have no power to declare a loan agreement unenforceable – and so the ombudsman is not the best forum for this kind of complaint. However, in these cases it often seems to us that
the consumer (or in some cases, their advisers) may not have entirely understood the effect of the law on which they are basing their claim.

In any case, we do not expect consumers to bring complaints to us as legal pleadings. We decide individual complaints on their particular facts and
merits – not on how expertly or persuasively the case is argued.

So while it would be for a court of law to consider the specifi c issue of the enforceability of a loan agreement, we can deal with general complaintissues
relating to whether a loan was unaffordable from the outset, and whether information provided by the lender was misleading about the cost (or benefi t) of taking out the loan.