Commentary on Sections Regulation of loans Section 71J Guarantees and securities: unauthorised participants
334.Section 71J makes specific provision in relation to guarantees or securities where the giver of the guarantee or security is not an authorised participant. It adapts the provisions in section 71I to take account of the differing nature of guarantees and securities from loans. This section does not apply to transactions extant at the time that the provisions are commenced.
335.Subsections (2) and (3) provide that both the guarantee or security, and the transaction it supports, are void. So, for example, if A lends £50,000 to a political party on the strength of a guarantee from B, and B is not an authorised participant, then both the loan to the political party and the guarantee of B are void.
336.Subsections (4) to (6) provide that if A is unable to recover the whole of the money back from the party, A is entitled to recover it from B (to the limit of the guarantee or security).
337.Subsection (7) provides that, as for other regulated transactions, these provisions apply where a transaction is entered into and an authorised participant subsequently cease to be so.
338.Subsection (9) deals with the position where a guarantee or security is provided not in respect of a loan of money or credit facility, but rather in respect of a transaction involving the provision of property, facilities or services to a political party.