The UK Supreme Court ruled last week that a lender 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 her partner’s debts.

The Supreme 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 that money it was lending to allow her to remortgage her home would be used in a way that did not benefit her financially.

Headline Ruling:

The ruling says that One Savings Bank PLC had a duty to investigate whether undue influence was exerted on Catherine Waller-Edwards by her partner, Nicholas Bishop, when she took out a mortgage partly used to settle his debts.

• Key Legal Point: The loan did not financially benefit her, triggering a duty of care by the lender.

• Judgement: Unanimous decision in favour of borrower protection.

Industry Reaction & Implications:

1. Lending Process Adjustments

Stephen Perkins, Yellow Brick Mortgages:

• Lenders may now:

  • Require solicitors to directly pay off debts when mortgage conditions specify it.

  • Implement additional checks where loan benefits are uneven between applicants.

  • Request independent legal advice for secondary applicants.

• Risk: Lenders may tighten affordability rules if debt consolidation is seen as problematic.

2. Wider Market Impact

Tony Redondo, Cosmos Currency Exchange:

• Positives:

  • Enhances consumer protection.

  • Promotes human-led due diligence over tick-box automation.

• Risks:

  • Slower mortgage approvals could delay sales.

  • Overcorrection by lenders might:

    • Raise borrower costs.

    • Push out legitimate applicants.

    • Create a bias toward large lenders with more compliance resources.

  • Uneven impact: Non-commercial/personal loans could be disproportionately affected, leaving commercial lending less scrutinised.

Summary Analysis:

This ruling marks a significant moment in borrower protection, especially in personal and joint borrowing contexts. It raises the bar for due diligence by lenders, especially where mortgage funds do not benefit all parties equally.

While it strengthens safeguards against financial abuse, it also introduces operational and legal complexity into the mortgage process. The property market could feel the effects through longer transaction times and potentially stricter lending criteria, especially for joint applications or debt refinancing.

A clear regulatory framework will now be essential to ensure consistency and fairness in how this is implemented—especially to avoid penalising smaller lenders or legitimate borrowers.