Sophia Smout examines banks’ responsibilities in non-commercial lending to couples in WealthBriefing
Sophia’s article was published in WealthBriefing, 22 July 2025, and can be seen here.
Sophia Smout, Associate in our Litigation & Dispute Resolution team, examines the legal and regulatory implications of banks lending to couples in non-commercial contexts.
She focuses on scenarios such as joint mortgages or personal loans, where lenders may not fully assess the nature of the borrowers’ relationship or their individual financial understanding. Sophia raises concerns that such practices can expose one party, often the more financially vulnerable, to significant risk.
Her article explores how recent case law and regulatory developments suggest that lenders may be expected to exercise greater due diligence in these situations. This includes:
- Being alert to signs of undue influence
- Ensuring independent legal advice is obtained; and
- Recognising imbalances in bargaining power.
The traditional assumption that co-borrowers share equal responsibility is increasingly being questioned.
Sophia also considers the potential for financial institutions to face liability if they fail to make appropriate inquiries into the relationship between borrowers or the purpose of the loan. She argues that this could prompt a shift in how banks approach personal lending, with a stronger emphasis on risk assessment, documentation, and borrower protection.
Ultimately, Sophia calls for clearer regulatory guidance and more robust safeguards to ensure that non-commercial co-borrowers are treated fairly. Her article underscores the need for lending practices to evolve in line with modern relationship dynamics and legal expectations.
Read the full article on the WealthBriefing website [external link].