Why Bank Personal Guarantees Are Hard To Enforce
In dealing with bank personal guarantee cases for seven or so years now, I can safely say that generally, personal; guarantee implementation and enforcement is not generally the strong point of the UK banking industry. They often fail to keep original documents of relating to the guarantees or the finance to which they relate, or forget to obtain the personal guarantee holder’s signature on essential documents or have them witnessed properly, thus often calling into question the validity of the personal guanratee. If the principle documents for the case are not valid, enforcing them is going to be nigh impossible.
The process of enforcing personal guarantees can be a long and arduous for the banks, for unlike Consumer Credit Act Agreements, they cannot assume proof of debt- they have to go through a court process to eventually obtain that and need to be seen to be acting properly before that.
Some banks may simply grow tired with the correspondence, and settle for a lower overall payment. Others may choose to take the case to court, but even at this stage the enforcement of the guarantee is difficult.
Banks have shown sloppy practice regarding important documentation, and in court, electronic or scanned documents are considered more remote than the originals, as they can be manipulated easily. Many banks have slipped into the bad practice of depending entirely on such documents, carelessly destroying or losing the originals, and for the electronic documents to be considered by the courts with the same regard they have to contain a number of details, such as the author's name; the date the document/record was stored; the names of anyone who has accessed or made changes to the document; details of the changes made to the document and version control….and the list goes on. This is a complex task for the banks to manage, and helps personal guarantee claims to no end as the likelihood of the banks complying with these rules is very small indeed, thus weakening their case substantially.
