secret commission payment from lender

magpiecottage

When was the mortgage taken out?

BJP13

From the paperwork I can find it was 1996 but when I contacted Clearview they believed it was 1998.

BJP13

Sorry I meant Clearlaw Solicitors not Cleaview!

dunstonh

When I telephoned them they seemed to know everything about my case,

Your data is not in the public domain. So,if they have info on you then its either because they or a company that have bought was the conveyancer. Or they have obtained details unlawfully. Or they just tell you enough to make you feel they know about you.

Does anyone have any advice, is this a scam?

Its difficult to know. Most people that have posted suggested the firm is just fishing. However, it may end up successful in some cases. If you fire a shotgun, then one pellet may hit whilst many will miss.

Was this a mortgage or a secured loan? A mortgage doesnt pay much commission. A secured loan can do. The recent court case ruled against the lender because of the size of the commission. It also involved PPI commission and not the commission on the loan.

magpiecottage

dunstonh wrote: »

Your data is not in the public domain. So,if they have info on you then its either because they or a company that have bought was the conveyancer. Or they have obtained details unlawfully. Or they just tell you enough to make you feel they know about you.

It sounds like the ex has told them (apparently giving the wrong year) in this instance.

The claim relies on case known as Wilson v Hurstanger. In that case, Wilson paid the broker a fee but was not told that the lender also paid commission to the broker. That is considered to mean that the commission was a bribe.

(There is no bribe if the borrower does not pay a fee because it is reasonable to suppose that the broker will be paid by somebody and if it is not the borrower then it must be the lender as the only other party to the transaction).

Having established that the broker took a bribe, that gives rise to a claim by the borrower against the broker.

What Wilson established was that the borrower can claim an amount equal to the commission paid from the lender. That is what Clear Law relies on.

The difficulty, after all this time, is proving that the broker received both a fee from you and commission that you were unaware of.

However, if it can be done, there is nothing to stop you going direct to the lender, citing Wilson v Hurstanger and, if appropriate, trying FOS.

FOS is free and earlier this year ruled that a business should refund undisclosed commission (albeit on something other than a loan). The issue would be whether its jurisdiction over GE Money went back that far.

One point I would make, though, is that in Hurstanger, it was argued that the amount of commission should be disclosed. However, in 2011, a different court ruled that simply knowing of the existence of the commission can be sufficient (presumably because if you know it exists the onus then falls on you to ask how much if it concerns you). The lender in that case was actually GE Money, so they would seem likely to be aware of that defence - although you should never underestimate capacity of a financial institution for incompetence.

dunstonh

The claim relies on case known as Wilson v Hurstanger. In that case, Wilson paid the broker a fee but was not told that the lender also paid commission to the broker. That is considered to mean that the commission was a bribe.

It sounded like that case but then the fee plus commission thing tends to be small amounts. In that case, it was a couple of hundred pounds.

I wondered if they are using the more recent Paragon case. However, that was because of a single premium PPI added to the debt where the just found the 70%(ish) commission rate obscene on the PPI.

BJP13

Thank you for the above advice, I have decided to try and go direct to the Lender. I rang FOS, but they were not able to help, they gave me Legal Ombudsman and they referred me to the Solicitors Regulations. There are no cases against the Solicitors but that doesn't really help. If I, as you mentioned, went myself to the Lender siting Hustanger V Wilson case would it be GE Capital Money or the Building Society I write to.

magpiecottage

It would be the lender.

As regards the comments of FOS, this is a technical argument and quite probably beyond their telephone team's expertise.

dunstonh

As regards the comments of FOS, this is a technical argument and quite probably beyond their telephone team's expertise.

Apparently, they have cases stacked up pending the outcome of their and the FCA analysis of the paragon case. The Hustanger has been around a long time and doesnt seem to have interested the FCA or the FOS.

magpiecottage

dunstonh wrote: »

Apparently, they have cases stacked up pending the outcome of their and the FCA analysis of the paragon case. The Hustanger has been around a long time and doesnt seem to have interested the FCA or the FOS.

I suspect this is because as soon as the FCA gains jurisdiction it insists on a Key Features document which includes disclosure of the commission, making it irrelevant.

However, you may recall DRN9697297 was published earlier this year.

In that case, FOS found against a firm that had not disclosed commission received on a Stamp Duty avoidance scheme and awarded the commission paid to the broker.

With that in mind, I think FOS could be persuaded by Hurstanger if somebody tried to apply it on a case where there was no disclosure.