Determination of just and reasonable sums attributable to the financing of loans — matters to be taken into account
3.—(1) This regulation specifies, for the purposes of supplementing subsection (5B), matters to be taken into account in determining such sum as it is just and reasonable to attribute to the financing of a loan in circumstances where the amount of the lender’s financial expenditure in relation to the loan is not readily ascertainable.
(2) Paragraph (3) below applies where the rate of interest payable on a loan is, in pursuance of the loan agreement, to be determined in respect of each interest period applicable to the loan by reference to the rate at which deposits are offered in an interbank market having regard to
(a)the amount of principal outstanding on the loan during the interest period, (b) the currency in which the loan is denominated, and (c) the length of the interest period.
(3) Where this paragraph applies, there shall be taken into account the interbank bid rates, determined in accordance with regulation 4, which correspond to each of the offered rates referred to in paragraph (2) above, by reference to which the rate of interest payable on the loan is at any time to be determined, having regard to each of the factors set out in that paragraph.
(4) Where, in relation to a loan—
(a)the interest rate is not determined under the loan agreement by reference to rates at which deposits are offered in an interbank market, or (b) it would be impracticable to establish the bid rates corresponding to the rates at which deposits are offered in the interbank market in question,
there shall be taken into account such amount as would, when deducted from the interest payable on the loan in any interest period, provide the lender with a margin no greater than would be usual in the case of loans of that description.
(5) Where a lender establishes to the satisfaction of the inspector that if, in relation to all loans made by him on which interest arose in any chargeable period, the interbank bid rates referred to in paragraph (3) above and the amounts referred to in paragraph (4) above (or, where such loans fell exclusively within either paragraph (3) above or paragraph (4) above, the said bid rates or the said amounts as the case may be) were taken into account in determining the sums attributable to his financial expenditure, the sums so attributable would be greater than the total amount of the expenditure incurred in financing those loans, then, in that chargeable period only and only if in all the circumstances it is reasonable to do so, there shall be taken into account the apportioned financing cost of the loan determined in accordance with paragraph (6) below.
(6) In determining the apportioned financing cost of a loan, regard is to be had to the cost to the lender in the chargeable period in question of obtaining funds for purposes which include the making of loans in that period, to the terms on which the loan was made and to any other relevant matters.