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CHAPTER 6

THE COST OF CREDIT

6.5.2Failure to Indicate APR —— In Breach of Duty to Disclose
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Notwithstanding any statement regarding the frequency and amount of any Repayments, the primary representation of the cost of credit to the borrower with respect to any Loan is the quoted interest rate being charged.


IF this primary representation is misleading, and its misleading nature is such that it would be likely to be an inducement factor, or a contributory inducement factor, to the borrower entering into a Contract with the Lending Institution, THEN it is a fair inference that the borrower was so induced and that a misrepresentation has been effected. (See Section 2.3.1: The Conditions Necessary for the Existence of Misrepresentation.)


It must now be clear (from the Illustration Comparison in Section 6.3) that the representation of 11.85% p.a. in their Mortgage Quotation is a misleading indication of First National’s charge for credit; this representation, of itself, constitutes Negligent Misrepresentation.


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On the matter of the failure to indicate the APR as described in Section 6.5.1 (a) and (b), notwithstanding the fact that prosecutions in relation to the various offences may never have been brought against the offending Financial Institutions, being guilty of any such offence affords the consumer a supportive weapon in a related Civil Action.


Remember also that, in the U.K., under Section 62(1) of the Financial Services Act 1986, an action for damages can be taken by a person who suffers loss as a result of a contravention of the ‘conduct of business rules’ [see Section 6.5.1 (c)].


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But the statute defined yardstick that enables a true comparison of the ‘cost of credit’ as charged by the various Lending Institutions, i.e. the APR, also constitutes a material fact likely to affect the decision of the borrower (in this case my wife and I) to enter into the contract.


Furthermore, the fact that First National compounded their interest charge annually (knowing that other Mortgage Lending Institutions compounded their interest charge monthly) also constitutes a material fact likely to affect the decision of my wife and I to enter into a contract with them.


First National, by reason of their fiduciary position, and Irish Life, both by reason of the existence of the special relationship duties transferring through their tied agent and by reason of the reciprocal Uberimma Fides duty incumbent upon them, were under a duty to disclose these material facts to my wife and I.


Their failure to do so constitutes a misrepresentation.


(See Section 2.3.3: Negligent Misrepresentation, and Section 2.3.4: The Duty to Disclose and Silence as a Misrepresentation. See also Section 2.8.1: The Right to Revoke the Contract, and Section 2.8.3: The Measure of Damages as a result of a successful Action based on the Common Law liability under Negligent Misrepresentation.)

 

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But the non-disclosure of the APR by First National, in light of their certain knowledge of the material significance of this information, must be seen as a deliberate act on their part. It therefore constitutes fraudulent misprepresentation.

(See Conlon v Simms in Section 2.3.4 (a): The Duty to Disclose and Silence as a Misrepresentation — Where a Fiduciary Relationship or a Special Relationship exists. See also Section 2.3.2: Fraudulent Misrepresentation and Section 2.8.2: The Measure of Damages as a result of a successful Action based on the Common Law liability under Fraudulent Misrepresentation.)

 

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