We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

secret commission payment from lender

Options
24567

Comments

  • MA61
    MA61 Posts: 111 Forumite
    Tenth Anniversary 100 Posts Combo Breaker
    edited 18 October 2014 at 7:51PM
    Hi all

    Thought it better to join in this thread than start a new one. My parents have been contacted by another legal firm, regarding the same lender and same period, pretty much offering the same thing, including the 35% fee on a no win no fee basis.

    I am wondering if I can fight this for them, and not have to be stung for the fee? I am going to do some research and post back here if and when i find out more.

    A
  • dunstonh
    dunstonh Posts: 119,646 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    am wondering if I can fight this for them

    OK, what exactly are you going to fight it on?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MA61
    MA61 Posts: 111 Forumite
    Tenth Anniversary 100 Posts Combo Breaker
    dunstonh wrote: »
    OK, what exactly are you going to fight it on?

    Something along the lines of this:
    In the case of Wilson v Hurstanger Ltd [2007] it was ruled that where there is a breach of fiduciary duty from a broker, the lender is an accessory to this breach and is therefore also liable to be the subject of any compensation claim arising out of voidable finance agreements such as this one.
  • dunstonh
    dunstonh Posts: 119,646 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    MA61 wrote: »
    Something along the lines of this:
    In the case of Wilson v Hurstanger Ltd [2007] it was ruled that where there is a breach of fiduciary duty from a broker, the lender is an accessory to this breach and is therefore also liable to be the subject of any compensation claim arising out of voidable finance agreements such as this one.

    That case was quite specific though. The borrower paid a fee in addition to the commission being paid and the commission amount was not disclosed. Most brokers do not charge a fee in addition to the commission. If there had been no fee charged, this case would have failed. So, was a fee charged in addition to commission? Was their borrowing taken out before or after commission disclosure was required? What type of loan is this? (mortgage, secured loan, unsecured loan)
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MA61
    MA61 Posts: 111 Forumite
    Tenth Anniversary 100 Posts Combo Breaker
    dunstonh wrote: »
    That case was quite specific though. The borrower paid a fee in addition to the commission being paid and the commission amount was not disclosed. Most brokers do not charge a fee in addition to the commission. If there had been no fee charged, this case would have failed. So, was a fee charged in addition to commission? Was their borrowing taken out before or after commission disclosure was required? What type of loan is this? (mortgage, secured loan, unsecured loan)

    Secured loan I assume (I have found the paper work and it says legal charge). There were legal costs added on (presumably for securing the loan via the legal charge), but no fee.

    The premise for pursuing this is that the solicitor who wrote to my parents say that they have obtained information from the lender that shows that they were one of the borrowers affected by the secret commission (how they obtained this info, I don't know). It may be a scam I guess, but a no win no fee solicitor - how would that work?

    My claim would hinge on the secret commission paid by the lender to the broker, for promoting their product and causing a conflict of interest with respect to providing financial advice.

    I refer you to paragraph 39 of the judgement:

    Obviously if there has been no disclosure the agent will have received a secret commission. This is a blatant breach of his fiduciary duty but additionally the payment or receipt of a secret commission is considered to be a form of bribe and is treated in the authorities as a special category of fraud in which it is unnecessary to prove motive, inducement or loss up to the amount of the bribe. The principal has alternative remedies against both the briber and the agent for money had and received where he can recover the amount of the bribe or for damages for fraud where he can recover the amount of any actual loss sustained by entering into the transaction in respect of which the bribe was given. (Mahesan v Malaya's Housing Society [1979] AC374, 383). Furthermore the transaction is voidable at the election of the principal who can rescind it provided counter-restitution can be made. (Panama & South Pacific Telegraph Co. v India Rubber, Gutta Percha, and Telegraph Co. [1875] 9 Ch App 515, 527, 532-3).

    Many thanks for your feedback so far.
  • joe55 wrote: »
    The company GE Money/Ocwen has agreeded to make an offer ClearLaw have said ,just dont know what it is, sometime in the next 7 10 days will get the letter of offer.
    i have not paid ClearLaw any fee i expect they will take there cut from any winning


    will keep you posted
    I am amazed if this is the case. Ocwen purchased the business of City Mortgage Corporation and this would be early 1990's when income disclosure was not even on the radar. All second charge lenders paid volume overrides back then without exception
  • joe55 wrote: »
    The company GE Money/Ocwen has agreeded to make an offer ClearLaw have said ,just dont know what it is, sometime in the next 7 10 days will get the letter of offer.
    i have not paid ClearLaw any fee i expect they will take there cut from any winning


    will keep you posted
    This was about 28 days ago.
    joe55 wrote: »
    clear law have indicated the claim in the region of £3000

    All very quiet since the "7 10 days" expired.
  • dunstonh
    dunstonh Posts: 119,646 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Secured loan I assume (I have found the paper work and it says legal charge). There were legal costs added on (presumably for securing the loan via the legal charge), but no fee.

    So, if there was no fee, what is it that you are trying to reclaim?
    The premise for pursuing this is that the solicitor who wrote to my parents say that they have obtained information from the lender that shows that they were one of the borrowers affected by the secret commission (how they obtained this info, I don't know). It may be a scam I guess, but a no win no fee solicitor - how would that work?

    Two models tend to exist on this front. One is like whiplash claims. It is cheaper for the firm to pay a few hundred pounds to get rid of the case than it is to employ solicitors to argue the case. The other is that the company will come back to you later saying there is a case but they need to charge you to take it to the litigation stage.
    My claim would hinge on the secret commission paid by the lender to the broker, for promoting their product and causing a conflict of interest with respect to providing financial advice.

    Brokers are not financial advisers. They are not employed or required to give financial advice and indeed, would not be authorised to give financial advice. So, your argument would be that they didnt do what they were not allowed to legally do in that respect. If no fee was paid then they were not employed by the borrower and no conflict existed.
    I refer you to paragraph 39 of the judgement:

    Obviously if there has been no disclosure the agent will have received a secret commission. This is a blatant breach of his fiduciary duty but additionally the payment or receipt of a secret commission is considered to be a form of bribe and is treated in the authorities as a special category of fraud in which it is unnecessary to prove motive, inducement or loss up to the amount of the bribe. The principal has alternative remedies against both the briber and the agent for money had and received where he can recover the amount of the bribe or for damages for fraud where he can recover the amount of any actual loss sustained by entering into the transaction in respect of which the bribe was given. (Mahesan v Malaya's Housing Society [1979] AC374, 383). Furthermore the transaction is voidable at the election of the principal who can rescind it provided counter-restitution can be made. (Panama & South Pacific Telegraph Co. v India Rubber, Gutta Percha, and Telegraph Co. [1875] 9 Ch App 515, 527, 532-3).

    That is because the borrower in this case paid a fee and the commission was not disclosed which allowed it to be potentially viewed as a bribe. The fee meant the borrower was employing the client. In your case, you indicate that no fee was paid. So, how would the commission be a bribe?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MA61
    MA61 Posts: 111 Forumite
    Tenth Anniversary 100 Posts Combo Breaker
    edited 19 October 2014 at 4:43PM
    dunstonh wrote: »
    So, if there was no fee, what is it that you are trying to reclaim?

    I must apologise - I have looked at the paperwork again and it is indeed a FEE that my parents paid to the broker. Sorry for wasting your time typing your response!

    On this basis, then, I assume that case law is indeed pertinent!?
  • dunstonh
    dunstonh Posts: 119,646 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    A fee and commission is allowed. However, the commission needs to be disclosed. If the amount of the commission is on any of the documents then its game over. If its not disclosed, then the case mirrors your scenario.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.8K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.