A landmark Supreme Court decision today ruled that a bank had a duty to investigate whether a woman was under the undue influence of her partner when she took out a mortgage that would be used partly to pay off his debts.

The Court held unanimously that One Savings Bank PLC should have carried out checks to discover whether undue influence was placed on Catherine Waller-Edwards by her partner, Nicholas Bishop, because it knew the money lent to remortgage her home would be used in a way that did not benefit her financially.

Expert Weighs In: Jennifer Richardson, Financial Crime Partner at law firm Blackfords LLP

“This significantly increases the liability on lenders to undertake checks in respect of those it is lending to, however the decision also raises a lot of questions about how this will be applied in the case of mortgage brokers for example. Will this liability extend to them as well? Should this lead to a more stringent regulatory regime?

Solicitors for example are often expected to identify similar situations when dealing with clients, and face regulatory investigations by the SRA if they fail to do so. It may be that we see a similar tightening of regulation amongst lenders as a result of this case.”