Southern Pacific Securities 05-2 Plc v Walker & Anor  UKSC 32 (07 July 2010)
“A credit broker administration fee and the interest payable on it were properly included in the charge for credit within the meaning of the Credit Consumer Act 1974 and the Consumer Credit (Total Charge for Credit) Regulations 1980, and accordingly, since those items did not form part of the amount of credit as set out in a loan agreement made between parties in 2005, that amount was correctly stated and the agreement was enforceable.”
24 For the reasons we have given, which are based both on the language of the statute and the authorities cited above, we hold that, although it too was advanced to the borrowers and repayable with interest, the fee of £875 was part of the total cost of, or charge for, credit and therefore cannot be treated as part of the credit.
25 Once that is appreciated, it can be seen that there is no infringement of the principle of truth in lending. The agreement is in clear terms. In the box on the front it draws a distinction between ‘Amount of Credit’, which in this case is the amount of the ‘Loan’ namely £17,500 and the ‘Total Amount Financed’, namely the ‘Amount of the Credit’ plus the ‘Broker Administration Fee’ of £875, which makes £18,375. Moreover the boxes, together with the provision quoted at para 4 above, make it clear that the rate of interest of 13.98 per cent is payable on the whole of the ‘Total Amount Financed’ and that the ‘Monthly Payment’ was £244.46. There was no basis for confusion as to what sum was to be paid each month or as to what made up the ‘Amount of Credit&and what was the ‘Broker Administration Fee’. Nor was there any basis for confusion as to the calculation of the APR shown in the bottom right hand box of 16 per cent. As the description states, it was applicable to the ‘credit shown in both A&B’, namely the ‘Amount of Credit’ of £17,500, but taking into account the interest chargeable on both that sum and the £875 ‘Broker Administration Fee’. It is not suggested that the APR was incorrectly calculated.
26 For these reasons, which are essentially the same as those more concisely set out by Mummery LJ in the Court of Appeal, we dismiss the appeal. We merely note by way of postscript that, if the fee had been included in the amount of credit, so that the ‘Amount of Credit’ was stated as £18,375, the borrowers would no doubt have said that the loan was unenforceable on the ground that the fee was part of the cost of the credit and should not therefore have been treated as part of the credit. Such an argument would have succeeded on the basis of the decision and reasoning in Wilson v First County . As we see it, in order to succeed in this appeal, the borrowers would have to persuade the court that Wilson v First County was wrongly decided. However, in our opinion it was not.