Cannon Assurance to sue C&G over joint mortgage venture
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Your support makes all the difference.CANNON Assurance, a subsidiary of US-owned Lincoln National UK, is suing Cheltenham & Gloucester Building Society over introductory fees Cannon claims it is owed over a joint venture terminated in October 1992.
Cannon issued a writ against C&G last week, and C&G is defending the action. The dispute emerged as C&G struggles to rescue the proposed merger with Lloyds Bank after the High Court ruled that the terms of the deal were in breach of building societies legislation.
The joint venture was launched on 26 March 1991 when C&G Guardian, the central mortgage lender left over from the 1990 takeover of Guardian Building Society by the C&G, agreed to supply mortgages to Cannon.
The 99-year mortgage packages produced by C&G Guardian were sold on by assurance companies like Cannon under their own brand names. But in 1992 C&G decided that the recession's impact on the centralised lending market meant that C&G Guardian should be closed. C&G ended the agreement with Cannon, and closed C&G Guardian at the beginning of 1993.
Cannon is claiming that although the agreement with C&G has been terminated, C&G owes Cannon a continuing stream of introductory fees built into the original agreement, relating to past business.
Mark Dawbarn, legal director of Lincoln National UK, says the writ relates to contractual claims for payment under agreements Cannon had with C&G. Although the agreement was terminated by C&G, Cannon is claiming payment for continuing compensation under the agreement.
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