Information Commissioner deals LOBO blow to councils
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Two councils have been ordered by the information watchdog to reveal details of contracts signed with banks for Lender Option Borrower Option (LOBO) loans.
The Information Commissioner’s Office (ICO) has ruled that Cornwall Council and Swansea City Council were wrong to withhold details of their LOBO loans in response to freedom of information requests by campaign group Debt Resistance UK.
The ICO has given both councils 35 days to release the information, which the councils had argued was commercially sensitive.
Joel Benjamin, campaigner at Debt Resistance UK, told Room151.co.uk: “It is pleasing that the ICO has ruled that the public interest weighs heavily in favour of disclosure. If councils want to make the argument that LOBO loans were taken out in the public interest that is fine, but they need to be transparent about it.”
The campaign group made the requests – which include copies of contracts between councils and lenders – as part of its campaign against LOBO loans, which it claims has cost local authority millions of pounds in unnecessary interest payments.
In its report on Swansea, the ICO said: “In this case the council has not supplied any cogent evidence to support the contention that disclosure of the requested information in this case would be likely to prejudice any party’s commercial interest, beyond stating that it would.”
The council “chose not to provide specific answers to the commissioner’s questions”, and only said that its lenders had objected to the disclosure of the information.
“However, despite requesting the evidence of the views of all the lenders concerned, the council only provided the commissioner with the views it received from one of them,” the ICO said.
Cornwall Council had argued that disclosure of the information “could create a false consumer expectation of the commercial terms the lenders are able to offer”.
“It is argued that the impact of disclosure would be to harm their ability to conduct LOBOs in the future and result in a distorting of the market,” according to the report.
In addition, the council said that its own working relationships with lenders would be prejudiced and that favourable rates would be more difficult to achieve.
In this case, the ICO accepted that disclosure of the information could cause some harm to the commercial interests identified.
It ruled that these factors were outweighed by the public interest.
The report said: “The commissioner is mindful that LOBO loans have been the subject of national scrutiny and concern.
“Particular concerns have been expressed about the size of local authority debt they involve and the high interest rates and lengthy schemes authorities find themselves locked into at a time when local government spending is subject to significant cuts.
“The commissioner considers that these factors provide strong public interest weightings in favour of transparency and facilitating public engagement and scrutiny.”
Benjamin said Debt Resistance UK had lodged further appeals against decisions to withhold information against a number of other councils with decisions expected shortly. A number of councils had agreed to provide details of LOBO contracts immediately in response to the initial requests, he added.
