Once you have proof that your broker essentially received a
bribe from your lender to arrange your mortgage or secure loan with
them, or that the broker failed to disclose his commission, then it
is time to take action.
Both the lender and the broker are jointly liable for the
fraudulent agreement but it is recommended that you pursue the
lender for compensation (as it is more likely that
they'll be in a better position to compensate you.)
Write to the lender explaining that you believe they illegally
paid an undisclosed commission to your broker and that this created
a conflict of interest where your broker had an incentive to make a
profit to arrange a potentially unsuitable financial agreement.
Mention to the lender that in the case of 'Wilson v Hurstanger
Ltd [2007] EWCA Civ 299' 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.
State that you demand the agreement be rescinded or at the very
least a full refund of all losses incurred by you entering into the
fraudulent agreement be provided. This includes: any broker
commissions (disclosed or otherwise), arrangement/set up fees,
administration fees etc plus 8% statutory interest (these fees
should all be found on the signed mortgage/secured loan
agreement).
Please note that if you receive a refund of all associated fees
then the capital sum (or what is left of it) will still be
outstanding.
Say that unless your request is met with a reasonable response
you will consider court action. Give them three weeks to
respond.
Remember to include the evidence that shows hidden commission
was paid, and send your letter recorded delivery so that you have
proof the lender received it.
If you are not satisfied with the lender's response then forward
the claim to the Financial Ombudsman Service. They are a free and
independent service that resolves disputes between consumers and
financial institutions. More information on how to contact them can
be found on their website.
Alternatively consider taking the dispute to the small claims
court (if your claim is for under £5000). Please see our guide on
taking disputes to the small claims court for more information. It
is highly recommended that you speak to your local Citizens' Advice
Bureau or a solicitor before taking any legal action.
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