When you take out a loan, you will either arrange it directly with a lender, or you’ll use a broker. This is a middle-man who is supposed to look at your financial situation, your wish for a loan and any other extenuating circumstances and then help you find the perfect loan.
They are paid a commission fee by lenders for finding clients, which of course raises questions about whether you’re actually getting the best deal for you or just the one that gets the broker the highest fee.
Mis-sold loan commissions are where a commission fee has been given to a broker without complete transparency for the customer. Thanks to the Plevin case in 2014, you could claim back a refund on the fees paid.
You can also be mis-sold a loan if the commission isn’t handled correctly. There are a number of regulations that must be adhered to, otherwise, you might be able to reclaim the money paid as commission even if you weren’t aware it was money you were paying.
Read our full guide below for more information about mis-sold loans relating to commission, including how you could be entitled to a refund.
We update all our guides regularly. If you are researching Plevin and Mis-sold commissions and we haven't got an exact guide that helps you, keep coming back as we update daily.
When you take out a loan with a broker, the lender will make a payment to the broker as a sort of finders-fee. However, they won’t do this out of their own pockets but will instead be charging it to you, even if it isn’t immediately obvious. Whether that’s a slight increase interest rate based on the fact you’ve applied through a broker or a simple loan setup fee, you’ll have to pay more to cover the cost that is then passed on to the broker.
That’s why, if your loan is mis-sold, you are due the refund. It’s your money that was taken illegally, and so you have an entitlement to get it back. You may not be aware that you’ve paid this money, and that’s usually the basis for being able to claim your loan has mis-sold.
Your loan agreement through your broker must be made with full disclosure of any commission payments involved. That simply means that you must know when commission is being paid, and how much.
One of the most common claims is where there is no disclosure about any commission at all. You simply assume that the broker has put you in touch with a lender, and you’re paying them. Check back through your loan agreement, and consider what information you were given when you applied. Was it clear that some of the money you were repaying would be used to pay the broker? If not, then you might have a case to claim that it was mis-sold.
Most applications via a broker happen online now, so expect to see websites that tell you that you're being redirected to a lending partner. But check the finer print to ensure that it is clear what reimbursement that online broker will receive.
Equally, it's important you know how much commission was paid. And this is where things get a little murkier because often you'll be told upfront that commission will be paid, but you won't often find out exactly how much. And this is just as incorrect. Imagine if you were charged a higher interest rate purely to cover the cost of the broker's commission, that was so much significantly higher than a standard rate that you decided to look elsewhere?
This harks back to the case of Mrs Susan Plevin, which led to the creation of the Plevin ruling. This wasn't related to loan commission fees but was extremely similar. Mrs Plevin took out a personal loan to restructure her debts and then was convinced to purchase Payment Protection Insurance alongside her plan. She paid over £5,000 extra for her PPI, and yet only found out later than 71% of that amount was commission. Only £1,600 was required for the premium itself.
Mrs Plevin took the lender and broker to the Supreme Court and won her case, which resulted in the Financial Conduct Authority, establishing that unfair high commissions could see customers given partial refunds. And while her case was all around PPI and it did not directly relate to loan commissions, you could certainly have a case that, if you didn't know how much of your repayments were used for commission, you were mis-sold.
Finally, on some occasions, you just may not realise you've paid commission because a broker might not make it clear they are a broker. Some may misrepresent themselves as the lender, purely to make the process seem quicker. Once you've passed their own eligibility checks, your details are then actually passed to a third-party lender, even if the rest of the process is still managed by the broker.
It's important you properly read your loan agreement contracts. If you see a name of a business, you don't recognise then question it with the broker before you sign anything. And if you've already taken out a loan but now feel maybe it was misrepresented to you, then it's another potential avenue for claiming that your loan was mis-sold and getting back your commission fees as well as any compensation you would be due.
Sometimes, you can get a refund of commission even when the commission itself isn't the issue.
Because brokers make this commission based on passing on customers to a lender, they might not give you the best deal. And historically this had led to customers being approved for loans that were not suitable for them, either because they were unaffordable or there were alternative products available that were much closer to what the customer requested.
If you were mis-sold a loan purely because the broker wanted to make more money from you, then you again have a definitive case to reclaim your commission and probably compensation too. Brokers and lenders have a legal obligation to look out for customers and ensure products offered are suitable. Payday loans were the most commonly sold loans, but the FCA have cracked down with newer rules to protect customers.
If you were given fair and reasonable advice, then your decisions and any consequences are your own, but if a broker misled you to sign you onto a loan agreement that you then struggled with, then you could be able to make a claim to get the commission payment returned to you.
If you have had a loan where you feel the commission wasn’t properly disclosed, either by being ignored completely or kept vague, then you may have a case for claiming your loan was mis-sold. Equally, if you were given a loan that you couldn’t afford or that wasn’t suitable for your personal circumstances, then again your broker and lender could be liable.
Complaints should be made firstly to the lender and broker, and then to the Financial Ombudsman Service if they aren’t dealt with promptly. However, you should always do your research to make sure that you have a solid case first. If you simply want to test the waters, but you think your loan agreement was actually legit, it will not be looked kindly upon.
That’s where we can help. We have mis-sold loan specialists on hand who can look at your loan agreement, and talk you through the application process, to determine whether you may have been mis-sold your loan and have a chance to reclaim your commission fees paid.
We’ll explain everything clearly, simply and honestly, so that you understand why you do or do not have a case worth bringing to the Ombudsman.
Whether a mortgage, PPI, credit card, overdraft or any other financial facility, if you were sold the package with undisclosed commissions, then you may have a claim for damages. The PPI commission compensation debacle cost the UK banking community literally billions of pounds.
While many financial institutions were “taught a lesson” by the regulators, there are still many historical and current valid claims which remained unsettled.
In theory, you only need to contact the company which arranged the financial package in question and query the commissions. The problem is that you may not have a copy of the original loan which should detail commissions received and from which parties.
The issue is that many historic loan agreements did not specify third-party relationships and commission payments. Therefore, things can get a little complicated. Therefore claims management companies are now the only real alternative for many people.
The vast majority of claims relate to unfair/high commission charges which were not disclosed at the time. We have seen various legal challenges over the years and it is now possible to claim back a large percentage of commission charged.
This type of compensation relates specifically to the arrangement between the loan companies and lenders. However, what if your advice was tainted somewhat by the prospect of high commissions?
This is yet another area where claims management companies have significant experience and should be able to assist you. If you can prove that the advice you were given was more based upon the commission received as opposed to the “right” advice for you, you could be in line for significant damages.
The vast majority of mis-sold loan compensation claims relate specifically to commissions, but there are some which relate to inappropriate advice.
Yes. The traditional time limit for claiming mis-sold loan commission compensation is three years. The clock will start ticking from the day you signed the agreement. However, there are many cases which are now being considered in hindsight from decades ago.
Therefore, where there are extenuating circumstances and perhaps the claimant was not aware until recently that they had been mis-sold a financial package, the three-year window of opportunity may be reset to the day they found out.
As the term suggests, a “no win no fee” arrangement is often associated with the claims industry as a means of holding negligent parties to account. In reality, the claimant will be indemnified from costs incurred by the claims management company while pursuing their claim.
This is why the vast majority of claims management companies will not consider any claim unless they believe there is a minimum 60% chance of success.
In tandem with a “no win no fee” arrangement, you will also come across the term “success fee”. This is a percentage of any compensation awarded which will go to the claims management company. The traditional level is around 25%, but this can vary depending on the type of case and duration.
Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for mis-sold financial products and they can do the same for you.
Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.
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