I would take a look at the last posting by ffw under "Information Commissioner - Drydens and Bradford and Bingley" dated June 30th 2003 re the legal privilege bit. As you say third party information can be blacked out.(posted 7510 days ago)I would email Lee Gardiner - Information Commission Compliance Officer at data@compliance.demon.co.uk and ask his advice, with the view to getting an assessment. If you are not happy with the assessment then you can ask for a full review.
Furthermore, a lender who has failed to act reasonably by not supplying the necessary documentation in order to justify their claim against a mortgage shortfall victim is required to do so under the Civil Procedure Rules, rule 1 (the 'overiding objective' + the Pre- action Protocol Direction). So I would also point this out to them. Please let me know how you get on. Good Luck.
Mark.