Team Money Savings Advice
When you use a broker to find a loan for you, they are instructed to evaluate your personal circumstances and then identify the best loan for you.
They’ll put you in touch with the lender who will then offer you an agreement. Once signed, the broker gets paid a fee for their involvement in the transaction.
Between 1990 and 2008, many loans were mis-sold due to lenders paying brokers undisclosed fees. If you took out a loan in this time period it may have been mis-sold and you could claim back the fees.
If you took out a loan between 1990 and 2008, and you used a broker to find the lender, you are more likely to have paid undisclosed loan commissions which you could now claim back.
However, it is possible for your load to be mis-sold if you had fees added to your agreement that you weren’t aware of.
Read our guide to find out more.
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Whenever you are given a loan, you are entitled to know exactly what you are paying for. That includes the interest rate at which the loan will be charged, any early repayment fees, the normal monthly repayment and the total cost of the loan. It also includes the total cost of any fees that are added to the loan, as well as any commission payments made by the lender to your broker.
However, before 2008, those fees and commission payments weren’t always made clear. Sometimes, payments were made to brokers without customers being told at all. At other times, loan agreements might state a vague clause that commission would be paid without detailing how much.
This resulted in these loans being mis-sold, and so if you were the victim of this, you may be able to claim back the money that was used to pay for these commissions or other fees. If you’re able to prove that you had undisclosed commissions or other fees included as part of your loan agreement, our mis-sold loan specialists can help you to claim it back.
There are two main reasons why undisclosed commissions are considered a problem and how they lead to classifying a loan as mis-sold.
The first is that you have a right to know where your money is going. When a lender pays a broker a commission fee, they are only doing that because of the higher prices you are paying. Without the commission, you might be able to get a better financial deal for yourself.
You’re ultimately paying the commission through your inflated interest rate, even if it is the lender that ultimately pays it to the broker. So if your commission fees aren’t made clear, you wouldn’t know how much of your money you could’ve saved with another provider.
The second reason, related to the first, is that you have no guarantee that your broker has acted in your best interest if their commission fee is undisclosed. You have every right to challenge it because your broker may not be seeking out the product with the best interest rate for you, but rather the loan that gives them the highest amount of commission.
This would mean that the broker isn’t doing their job properly and is acting illegally. Both of these are serious causes for concern and are why you are now able to claim back the money you were unfairly charged that was undisclosed on your loans.
There’s quite a straight-forward answer as to why agreements from 1990 to 2008 are more likely to be mis-sold.
Quite simply, loan commissions and the use of credit brokers exploded in popularly in the very early 1990s. For 18 years, the lenders and brokers offered thousands of loans to customers without the consideration that their commission fees could cause them problems further down the line.
However, in the late 2000s, a number of cases went to court when people realized they were being charged set fees and commissions that they either weren’t aware of at first or that they knew about but didn’t have any scope of the value.
As these cases started to be seen and rulings were all coming down on the side of the customer, lenders and brokers got their act together essentially and started cleaning up their processes to make sure any future agreements were legally compliant.
The result is that, if you took out a loan since 2008 you are significantly likely to have not paid out fees that you weren’t aware of, as long as you have read your loan agreement fully (and the obligation for this does rest with you – you cannot claim ignorance if fees are clearly set out in your agreement).
There is a chance that you took out a loan since 2008 with a disreputable lender or broker (often both would be disreputable in tandem) who included hidden commission fees, but they are few and far between considering the serious financial penalties involved if they were caught.
If you took out a loan prior to 2008, you may have unwillingly paid commission fees that you could now claim back, and it’s worth investigating the details of your agreement to see if you have a case.
While many of the claims were settled in 2008, it was the 2007 cases of Wilson & Anor v Hurstanger that really set the precedent and caused the change. You can view the full judgement in this case here but, in summary, Mr Wilson took out a loan and was told that alongside his fee for the broker there would be a payment made by the lender as a commission fee, but the amount wasn’t disclosed. Mr Wilson successfully argued this wasn’t fair and, once the case was decided, he was awarded the full amount of the commission payment along with interest.
The Plevin ruling of 2014 mirrors this too, although this was specifically surrounding PPI claims. Following Mrs Susan Plevin’s claim that the amount of commission she paid on her PPI policy wasn’t disclosed, she was mis-sold the agreement, and the judge agreed considering the amount turned out to be 71% of her actual payment with only 29% of her fee being used for the actual policy.
You could now potentially use this line of argument too if you believe that undisclosed commission fees on your loan turn out to be exceptionally and unfairly high.
Firstly, you need to understand whether you think you might have been mis-sold a loan based on hidden commission fees. The easiest way to do this is to find your loan agreement and read the terms and conditions. If your agreement doesn’t mention commission, but you know a broker was used, or if it does mention a commission payment without clarifying how much, then you may have a claim.
If you took out a loan between 1990 and 2008 and you either can’t find your loan agreement, or you aren’t sure whether your agreement does include hidden fees, there’s no need to dismay. Simply get in touch with our mis-sold loan specialists, who are experts in this area. We can take a look through your agreement, or help you identify details on the loan you think you had, and then aid you in putting together your case to reclaim your money.
If you are seeking compensation/damages against the broker/lender who mis-sold a loan between 1990 and 2008, it might be useful to speak with a claims management company. The likelihood is that your paperwork will be lost, you may have limited details on the original agreement, and without this, it can be difficult to prove your case.
However, claims management companies are very adept at putting together both physical and circumstantial evidence regarding your claim.
Using the Plevin case, you may be able to prove that the hidden commission/charges associated with your financial transaction were excessive and unfair. As a consequence, if you can provide evidence, then you should be able to reclaim at least part of the commission charged. However, there may be more!
This is where it can start to get very interesting with regards to compensation/damage claims. Unfortunately, there is evidence that some brokers/lenders may not always have recommended the best deal for their client.
Indeed there is evidence to suggest that some brokers/lenders showed a preference for those parties offering significant commissions. If you are able to prove inappropriate advice cost you in some shape or form, then you may well be entitled to additional damages.
When looking to reclaim compensation for mis-sold loan commission, there is traditionally a three-year window of opportunity. The clock begins from the date you signed the agreement. However, if it is only further down the line that you become aware that the loan may have been mis-sold then this is a whole different scenario.
You should be able to restart the three-year window of opportunity from the date that you found out you had potential been mis-sold a loan package. Note you do not have to conclude the complaint within the three-year period you just need to have formally lodged a complaint.
The vast majority of claims management companies will work on a “no win no fee” arrangement. This effectively indemnifies the claimant from covering the claims management company’s expenses pursuing your case.
As a consequence, claims management companies will only consider cases they believe have a minimum 60% chance of success in order to reduce their exposure to unsuccessful prosecutions. They will, however, negotiate what is known as a “success fee” which is effectively a percentage of any compensation awarded.
When seeking compensation for mis-sold loan commissions, and personal injury claims, the average “success fee” is around 25%. This is basically the charge for using the experience and the services of the claims management company to pursue your claim.
Unfortunately, we can only estimate the number of perfectly valid financial compensation claims which fall by the wayside. Whether as a consequence of misunderstandings or ignorance to the fact that they have been mis-sold loan package, many victims will never receive their rightful compensation.
As a consequence, many potentially liable third parties who had acted inappropriately will not be held to account.
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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