Northern Rock Asset Management (NRAM) is suing international law firm, Eversheds, in a claim worth £100m.
NRAM says it became liable to refund all the charges and interest it had charged to borrowers on loans following negligent advice from Eversheds.
NRAM is the state-owned ‘bad bank’ which took on the toxic debts of insolvent lender Northern Rock. It claims that Eversheds gave negligent advice which meant that the annual statements for its ‘Together Loan’ did not comply with the terms of the Consumer Credit Act. It also alleges that Eversheds failed to provide advice in a reasonable time.
The ‘Together Loan’ combined a mortgage with unsecured borrowing in one loan at a single rate of interest with one monthly repayment.
The claim will be “vigorously defended” according to an Eversheds spokesman. The law firm says that it was asked to review the loan documentation to make sure it complied with the Consumer Credit Act. It found that the documents did not appear to meet the requirements of the regulations and says it told an ‘experienced commercial lawyer’ in NRAM’s legal department. “NRAM appear not to have acted on that advice for a considerable period or at all, and is now seeking to blame Eversheds for the consequences of the information being absent from the documentation,” said the Eversheds spokesman.
“No trial date has been set for this huge professional negligence claim and it may be some time before we see the parties in court” said James Page, Director – Head of Client Servicing, Brunel Professional Risks. “From the outside it appears that the outcome will be significantly dependent on which party can document their case better.”