Money Creation

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Dear The Financial Conduct Authority,

It is now becoming a widely known fact that when Banks make loans for items/purchases such as a Homes or Car. The money provided to the consumer doesn't actually exist and instead is created or deposited when a consumer signs a Credit Agreement.

As such in reality, the Bank has in essence borrowed from the consumer in order to serve the consumer. I trust you follow my logic.

If this is the case, it would be fair to assume any interest charged by the bank is unlawful as one cannot charge someone for their own money.

Equally in line with this, it is becoming widely known that 95% if not 100% of Banks fail to keep a copy of a Credit Agreement or as is often the case, sell the agreement on. In doing so the Bank are committing fraud as they are attempting to collect on a Loan they cannot legally or lawfully prove or post selling the Agreement are no longer entitled to collect.

Could you please advise on what remedy the FCA is considering with regards to this, and whether they FCA plans to stop this unlawful behaviour.

Yours faithfully,
Nimit Jethwa

The Financial Conduct Authority

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Customer Contact Centre, The Financial Conduct Authority

Dear Mr Jethwa,


Thank you for your email of 17 June.


Consumer Credit


We note the points raised in your email. However, a lender does not borrow
from a consumer when it provides a consumer with credit.  Lenders have a
range of possible sources of funding available to them, including
investors’ wholesale funding as well as the lender’s capital base.


The definition of "credit" is fundamental to the Consumer Credit Act 1974
(“CCA”) and "includes a cash loan, and any other form of financial


A consumer pays interest on the credit provided by the lender on the basis
of a credit agreement regulated by the CCA. Lenders are required to set
out the rate of interest to be charged both in the pre-contract credit
information (also referred to as the “SECCI”) provided to the borrower
before entering into the agreement, and in the credit agreement in
accordance with CCA regulations.


The interest rate charged may, in part, cover the lender's costs of
obtaining funds (including the cost of administering the loan), compensate
the lender for money it could otherwise earn on investing the money
elsewhere, and in part takes account of the lender's risk of non-repayment
by the borrower.


Copy of credit agreement

Under section 77 of the CCA, a lender is required, at the request of a
borrower, to provide a copy of the executed credit agreement and
information in relation to outstanding amounts within the 12 working days
of receiving the request. 


If the lender fails to comply with this request, it is not entitled to
enforce the credit agreement until the request is fully complied with.
While the credit agreement remains unenforceable, the lender is still
entitled to take a number of actions, including demand repayment of the

To meet the requirements of section 77, the lender is not required to
provide an exact copy, photocopy or microfiche copy of the signed
original. This is reflected in the CCA which requires the copy of the
credit agreement provided under section 77 to be a “true copy”. 


Under the Consumer Credit (Cancellation Notices and Copies of Documents)
Regulations 1983, a “true copy of the credit agreement may omit the
signature and date of the credit agreement. The “true copy” of the
executed credit agreement may be reconstituted from sources other than the
actual signed credit agreement following Carey v HSBC [2009].


However, if the lender provides a reconstituted copy of the credit
agreement, it should explain to the borrower that this is what it has


Selling a consumer credit agreement debt

It is common industry practice for lenders to sell a portfolio of their
credit agreement debts to third parties known as debt purchasers by way of
a legal assignment of the debt.


Once a loan has been legally assigned, the debt purchaser becomes the
legal owner of the debt and can collect and pursue outstanding repayments
on the loan from the borrower. The lender has no continuing right to seek
repayments of the loan from the borrower after the debt has been


If you are aware of lenders that are seeking to collect repayments on
loans after they have sold them to another firm, we would welcome any
evidence that you can provide to us.


I appreciate the time you’ve taken to get in touch with us, and hope this
information clarifies the points you have raised.


Yours sincerely,


Lee Anthony Manhood (Mr)

Associate | Customer Contact Centre

Financial Conduct Authority | [1]

Consumer Helpline: 0800 111 6768




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