Taken out a Secured Loan or Mortgage Prior to 2009?

Many individuals are unaware they've been sold a financial product that wasn't right for them—like investments, mortgages, or loans—until they come across an advertisement, read a news article, or are contacted by a company such as ours that sheds light on the issue and outlines steps for reclaiming their funds.

Take Payment Protection Insurance (PPI) for instance. Before claims management firms began raising awareness, the extent of PPI mis-selling was largely unknown, despite 64 million policies being in circulation. Eventually, nearly every UK bank and loan provider compensated over £53 billion to the 32 million customers who filed claims.

However, PPI mis-selling is just one example of how financial institutions have profited at their customers' expense.Remarkably, over £10 billion in secret, undisclosed commissions from residential and buy-to-let mortgages, as well as secured loans, have been identified within the UK. These funds, too, are eligible for recovery by the consumers they were hidden from.

The primary culprits in the landscape of questionable lending practices are the so-called sub-prime lenders. Historically, these entities utilised networks of brokers and mortgage advisors to distribute their mortgage and loan products. They specifically targeted individuals who might struggle to secure financing through conventional means due to various challenges, including the inability to verify income, needing to borrow amounts beyond what traditional lenders offer, lacking the substantial deposits required, or having a history of credit issues.

However, during the late 1990s and early 2000s, as broker-mediated financing grew more prevalent, a broader demographic of borrowers entered the scene. Despite the higher interest rates compared to those of mainstream banks, the availability of interest-only loans—lacking a structured plan for paying off the loan's principal—rendered these sub-prime mortgages more affordable on a monthly basis than the repayment mortgages offered by traditional banks. This aspect made them particularly appealing, despite the long-term financial implications.

The issue stemmed from sub-prime lenders charging higher-than-average interest rates, which varied across the board. This allowed for the payment of secret commissions to financial advisers or brokers, unbeknownst to the individuals taking out loans or mortgages.These covert payments were essentially bribes, where the lender compensated the broker without the customer's knowledge. Ideally, brokers are expected to secure the best possible deal for their clients, acting in their best interest. However, the allure of extra commission from lenders often led brokers to prioritize these deals, costing borrowers thousands in additional interest over time.Such inducements compromised the brokers' obligation to provide unbiased advice, making the commissions not just unethical but illegal if not disclosed to the borrower.Despite the secrecy surrounding these practices, there's now an opportunity for recourse.Legal and regulatory frameworks addressing secret commissions and undisclosed payments have a long history in the UK, dating back to 1875 and with precedents as recent as March 2021. These laws are well-established and provide a solid foundation for claims.A new initiative has been launched to tackle these issues through the UK courts. While many cases are settled before reaching court due to compelling evidence against the lenders, this effort unites legal funding, expert legal counsel, comprehensive insurance coverage, and a panel of specialist law firms. This collective aims to represent clients effectively in these claims.A key advantage is the ability to leverage detailed investigations into the involved companies, enabling law firms to demand crucial documents from lenders. These documents are required to be presented in court, substantiating the claim of undisclosed commissions.

When you win a case regarding undisclosed commissions, the goal of the compensation is to restore you to the position you would have been in if those commissions had never been paid. This means you're entitled to recover not just the commission itself, which can amount to thousands of pounds, but also the extra interest you've paid throughout the duration of your mortgage or loan.

The impact of this interest can be substantial over time, with the average claim value being around £50,000. In numerous instances, the financial impact is so significant—or other complicating factors come into play—that it leads to the entire mortgage or loan being cancelled. This legal remedy is known as rescission.

We encourage you to get in touch with us if you have taken out any of the following:
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•A secured loan that was arranged prior to 2009,
•A residential mortgage set up before the 31st of October, 2004, or
•Any mortgage for a Buy to Let property.

Feel free to reach out for a discussion about your specific circumstances.