‘Scandal’ causes MP to call for greater regulation of lending on farms
by: Edward Murray
The call came during a Westminster Hall debate on 11 November. Elfyn Llwyd MP for Dwyfor Meirionnydd described the plight of constituents Mr and Mrs Williams, whom he said had lost everything on the back of what he called ‘one of the worst scandals’ he had come across.
Llwyd said: “Mr and Mrs Williams were forced into a succession of short-term bridging loans of between three and six months with UK Acorn Finance Ltd, with enormous arrangement fees and interest costs resulting in a vicious spiral of unnecessary debt over which they had no control.”
Ultimately Mr and Mrs Williams’ farm was repossessed and Llywd said there were many others who had suffered a similar fate. “To my knowledge, there are 44 different complainants, all of whom had complained to Avon and Somerset police by June 2013,” he said.
During the debate a further case came to light when Jonathan Edwards MP for Carmarthen East and Dinefwr stood up. “My right hon. friend is making a powerful case on his constituents’ behalf,” said Edwards. “In talley in my constituency, there is a case that mirrors the structure of deception perpetrated against his constituents; it involves a company, associated with UK Acorn Finance, called UK Farm Finance Ltd.”
Both MPs said farmers were in a particularly vulnerable position because they were cash poor but asset rich and so while they had the security to borrow against they were often not in a position to service the debt.
In response to contact from Mortgage Solutions, UK Acorn Finance Ltd gave the following statement: “We have read the transcript of the debate moved by Elfyn Llwyd MP in Westminster Hall on 11 November, 2014. It would not be appropriate for us to comment on the details of our business dealing with his constituents as those are subject to both legal proceedings and client confidentiality, save to say that all the various allegations about our dealings with his constituents that Mr Llwyd raised in the debate yesterday have already been considered by the Court and determined in favour of this company.
“UK Acorn Finance Limited and its directors categorically and strenuously deny all and any of the allegations of wrong doing or of inappropriate behaviour in their dealings with Mr Llwyd’s constituents or with any other of their borrowers.”
Pushing for a new look at regulation for mortgage lending on farms, Llywd said: “There is every reason to leave farms in the domestic area, because if something goes wrong, people do not just lose a house, which is bad enough – they lose everything.”
This was a position supported by others in the debate and Cathy Jamieson MP for Kilmarnock and Loudoun said: “On a day when we have heard that the Financial Conduct Authority (FCA) has, at long last, taken steps to deal with some of the worst excesses in the payday lending industry, it is timely to reflect on what other areas need to be tightened up.”
Responding to calls for greater regulation in this area, Priti Patel MP for Witham and the Exchequer Secretary to the Treasury, said: “We need to ensure that loopholes are closed and that individual protections are put in place. The government are clear about being committed to introducing FCA regulation, where there is a clear case for doing so, in the right and proper way. However, there is a balance: we do not want to impose greater burdens, additional red tape and costs on financial firms, but we want to ensure at the same time that consumers are protected.”
This was a position supported by Ray Boulger, senior technical manager at John Charcol. He said: “When it comes to lending on a farm, although admittedly some farms may include a farm house, essentially the lending on the farm is a commercial activity. If you suggest mortgage lending on farms should be moved under the domestic umbrella, which clearly means it would be regulated by the FCA, where do you draw the line?”