Dear Prudential Regulation Authority,
I have a understanding of prommisary notes were you have a debt and clear it so u can pay it in full at a later date but what I want to understand is if the note is reasonable does the bank have to accept it by law?
And can this form of new contract be used against a morgage
Yours faithfully, Mike Duffy
Dear Mr Duffy,
Thank you for your email of 7 February enquiring about promissory notes.
May I first explain that the Freedom of Information (FoI) Act provides a general right of access to recorded information held by a public authority. It does not require a public authority to answer general questions on a subject as is the case in this instance. However, I have provided an answer to your question below which you might find of interest.
The Bank of England has the monopoly of note issuance in England and Wales in accordance with the Bank Charter Act 1844.
Under Section 11 of the Bank Charter Act 1844, it is not lawful for any banker ‘to issue, in England or Wales, any bill of exchange or promissory note or engagement for the payment of money payable to bearer on demand’.
Section 28 of the Act defines ‘banker’ to include ‘all corporations, societies, partnerships and persons, and every individual person, carrying on the business of banking, whether by the issue of banknotes or otherwise’.
The Bank also regulates the issuance of banknotes in Scotland and Northern Ireland under Part 6 of the Banking Act 2009 which established a new regulatory framework for banknotes issued by certain authorised banks in Scotland and Northern Ireland.
If you wish to issue a promissory note as an agreement between yourself and another individual or firm, then the Bank would not play a role in that, it would purely be an agreement between yourself and that other individual or firm.
I hope this helps to clarify matters.
Engagement and Enquiries Group
Bank of England | Threadneedle St, London EC2R 8AH
+44 (0)20 3461 4878
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