County Court permits enforcement of unregulated loan in Wartenburg v Uddin

The County Court at Birmingham has ruled that a family loan secured against a Derbyshire property may be enforced despite breaching the general prohibition on unauthorised lending under the Financial Services and Markets Act 2000, in a judgement examining identity deception, an undisclosed bankruptcy and repeated adjournment applications.

In Ephraim Wartenburg & Anor v Rahim Uddin & Anor [2026] EWCC 46, Her Honour Judge Saira Singh considered a claim by Ephraim and Shlomit Wartenburg to enforce a legal charge securing a £196,000 advance made in 2009 to Rahim Uddin, who had introduced himself using his cousin's name, Ruhul Amin. It was common ground that the charge constituted a regulated mortgage contract and that the claimants, private individuals lending outside any regulated framework, fell within the general prohibition in section 19 FSMA, rendering the agreement unenforceable absent a court order under section 28(3).

The trial itself proved procedurally fraught. Mr Uddin represented himself on the first day but failed to attend the resumed hearing, having earlier sought adjournments supported only by a brief letter from a non-medical prescriber and a fit note that fell well short of the standard set out in Levy v Ellis-Carr [2012] EWHC 63 (Ch). The judge proceeded in his absence, later noting that Mr Uddin had also failed to disclose to the court or the claimants that he had been made bankrupt in November 2025, a fact she found telling as to his credibility. Mr Amin, the second defendant, did not engage with proceedings at all and his evidence was disregarded in its entirety.

On the substantive question, the judge accepted that the claimants had not realised they were carrying on a regulated activity and had reasonably relied on their solicitor, who had since died, to flag any relevant regulatory requirements. Following the reasoning of Lord Neuberger in Helden v Strathmore Ltd and Chief ICC Judge Briggs in Jackson v Ayles, she held that genuine ignorance of the general prohibition meant the claimants could not rely on the "reasonable belief" provision in section 28(5), a factor she treated as weighing heavily against enforcement.

That factor was, however, outweighed by the wider circumstances. Unchallenged expert evidence from Simon Jaquiss established that a 100 per cent loan to value mortgage fixed for ten years was not available in the mainstream market in 2009, and that the charge's 6.1 per cent rate sat comfortably within rates then offered by regulated lenders. The judge found no evidence that the claimants, occasional lenders rather than professional moneylenders, had exploited Mr Uddin's inexperience. She noted that he had benefited from ownership of an appreciating asset he could not otherwise have financed, that the claimants had extended repayment terms on numerous occasions, and that he had subsequently sold another property for £170,000 without applying any proceeds to the outstanding balance.

Weighing the respective positions of the parties in line with the approach in Helden, the judge concluded it was just and equitable to permit enforcement under section 28(3), entitling the claimants to recover £203,000 in outstanding capital together with accrued interest arrears. She indicated that, had she found otherwise, she would in any event have ordered repayment of the capital sum under section 28(7) on the basis that the defendants had elected not to perform the charge.