Reclaim of broker fee on mortgage

[TUTTSI]

Re: Reclaim of broker fee on mortgage

Ruby, here is my thread with the igroup - which needs attention I know and will get back on it very soon - so watch out igroup.

http://www.legalbeagles.info/forums/...ad.php?t=14984

My intention was to take this to the FOS.

Tuttsi x

[Ruby]

Re: Reclaim of broker fee on mortgage

Just read your thread. It doesn't apply in my case, however I'm determined I'm going to challenge them re commission undisclosed - will keep you posted.

[Tools]

Re: Reclaim of broker fee on mortgage

Hi Ruby,

A similar question is being discussed here > Need a guide for unregulated/secured credit and cca application - Legal Beagles

You are entitled to ask iGroup how much they paid the broker in commission on top of his broker fee. However, it was the iGroup that paid him this commission not you and I very much doubt that it was included in the cost of the mortgage.

I do ( in my opinion ) think that you do not have a valid claim on broker fees or commissions, but maybe the arrangement fees etc as Tuttsi has mentioned on her thread.

[Ruby]

Re: Reclaim of broker fee on mortgage

I am just about to send I Group a letter challenging them the transparency of their T&C's, as per OFT guidelines. My gut feeling is that the Broker put business deliberately through IGroup due to the commission, therefore not offering me the full benefit of the competetive market at the time and taking advantage of the sub-prime market ie. desperate people - you scratch my back I scratch yours - a practice as old as time. It is possible that I did not directly PAY the commission however what about the difference in the base rate, how much of that went to the broker too? I may open a whole can of worms and not get very far, but I am very intrigued. It is true what they say about the older you get the wiser ....

[Tools]

Re: Reclaim of broker fee on mortgage

I agree with what you are saying re; not having independent advice about the best deal for you at the time and that this particular deal may have been more beneficial to the broker because of commissions. Let us know how you get on and good luck.

Did your broker state that he was fully independent and that he would search out the best deal for YOU.

Have a read here FSA Handbook - Full Handbook

and in particular read the following

What commission payments and inducements must my firm disclose in the KFI?

For standard mortgages, the KFI must include Section 13 'Using a mortgage intermediary' in intermediary cases (MCOB 5.6.113R). You must disclose the following:

* The total amount payable directly or indirectly by the lender to the mortgage intermediary, and any third parties. This includes fees paid by the lender, to appointed representatives of a principal acting as intermediary, unregulated firms such as introducers, networks, mortgage clubs and similar (MCOB 5.6.113R(1)).
* Any cash payments, and material inducements shown as a cash value (MCOB 5.6.117R and MCOB 2.3.7R).
* The name of the lender and the names of all recipients including networks, mortgage clubs, introducers or similar where they receive a share of the fee paid by the lender. Firms can disclose individual amounts payable to each recipient or show the total amount payable as a single figure (MCOB 5.6.113R(2)).

If the total amount is no more than £250, you can simply disclose this. Firms need not disclose the actual amount payable (unless the customer asks for this information) (MCOB 5.6.114R).

If an intermediary will pass on all or part of this commission to the consumer, he may state this and the amount payable to the consumer in Section 13 (MCOB 5.6.115R).

Firms have freedom with the text and format of disclosure used. However, MCOB 5.6.119G provides a simple example.

Payments that firms do not need to disclose in the KFI are:

* fees paid by a lender to a firm for processing a mortgage application purely on an outsourced basis, providing that firm is not connected to the intermediary, for example, through common ownership, a mortgage club, a network etc. (MCOB 2.3.8G(2) and MCOB 5.6.118G);
* commission paid by an intermediary to an unregulated introducer for a mortgage lead, where the payment is made out of the intermediary's own funds and is not as a result of a direct or indirect payment by the eventual lender;
* commission paid by a lender to an unregulated introducer for a mortgage lead which the lender later treats as a direct mortgage application (because our rules – in MCOB 5.6.113R - only apply to KFIs provided by, or on behalf of, an intermediary);
* non-material inducements (MCOB 2.3.7R only requires quantification of material inducements); and
* payments made by a lender in its capacity as 'lender principal' to an appointed representative when selling that lender's product. For example, where 'ABC Estate Agents' sell an ABC mortgage as an appointed representative for 'ABC Mortgage Lender'. (This is because an appointed representative who issues an illustration is not a mortgage intermediary under MCOB, and neither is the principal in this case so MCOB 5.6.113R does not apply.)

For lifetime mortgages, there are equivalent rules (in MCOB 9.4.119R to MCOB 9.4.125R) covering commission disclosure in Section 16 of the lifetime mortgage KFI.

[Ruby]

Re: Reclaim of broker fee on mortgage

Hi Tools, l'm loaded with a cold and starting to feel the effects of a large glass of wine! Does the above mean that they have to disclose the amount in simple english? Sorry .......

Since the loan/mortgage was taken out in Nov 2002 I can't remember if the broker said he was fully independant or not.

[Tools]

Re: Reclaim of broker fee on mortgage

If the total amount is no more than £250, you can simply disclose this. Firms need not disclose the actual amount payable (unless the customer asks for this information) (MCOB 5.6.114R).

Not unless you ask, which you will be now

Firms have freedom with the text and format of disclosure used. However, MCOB 5.6.119G provides a simple example.

Have not read MCOB 5.6.119G but I suspect it will be similar to the clause

2.1 We will pay the broker on your behalf out of the loan any fee shown at D on page 1.
2.2 Your broker will receive a commission from us if your loan completes. The commission he receives will be a percentage of the amount of the loan which may vary according to the type of loan which we make.

[Ruby]

Re: Reclaim of broker fee on mortgage

Thanks :tinysmile_grin_t:

Main Man's OFT thread earlier on talked about transparency needed in telling all parties involved percentages/amounts being paid - FSA seem to contradict this - no wonder financial companies have got away with so much for so long

[Ruby]

Re: Reclaim of broker fee on mortgage

Can anyone please help translate? Just got a letter back from G E Money (formerly IGroup)

Thank you for your letter dated 28th October 2009.

However, you have failed to particularise that the broker owed you a duty. Please fully particularise if you are asserting a fiduciary duty existed and provide evidence in support.

Thank you.

Yours sincerely

It come from their Contentious Litigation Department

What the hell do they mean? .......

[Tools]

Re: Reclaim of broker fee on mortgage

Could you post up the letter you sent to them also, would help put their comments in context.

[Ruby]

Re: Reclaim of broker fee on mortgage

Dear Sirs

ACCOUNT NUMBER XXXXXXX

After reviewing past paperwork with regard to the above account it has come to light that your Company did not follow the Office of Fair Trading Regulations document regarding non-status Lending Guidelines for Lenders and Borrowers Revised in 1997.

In your terms and conditions clause 2 - Broker fees it stated the following:-

2.1 We will pay the broker on your behalf out of the loan any fee shown at D on page 1.
2.2 Your broker will receive a commission from us if your loan completes. The commission he receives will be a percentage of the amount of the loan which may vary according to the type of loan which we make.

We would like to refer you to the clause in the OFT guidelines document relating to the Transparency - Lender to Borrower paragraph 16 and the Broker to Borrower paragraph 19.

We were not made aware of any percentage/amount of commission paid to the Broker by your company at any any point in time and it certainly is not written anywhere in the Agreement nor were we told orally or in writing on what basis the Broker came about charging us £2500 for his services.

We would appreciate your due diligence in this matter and look forward to your reply within 14 days of this letter. Should you fail to comply we will have no alternative but to report your Comapny to the relevant authorities.

Yours faithfully

[Tools]

Re: Reclaim of broker fee on mortgage

Ok, to be honest, I cannot see in that letter what exactly you were asking for.

[Ruby]

Re: Reclaim of broker fee on mortgage

Hi Tools, I was asking G E Money how much commission they had paid the broker (paragraph 5). Maybe the letter I wrote was not clear enough. I believe I have the right to ask, so as to ascertain whether the broker was truely independant or whether he deliberately put business IGroups way to get the best commission. Hope you can now understand where I am going with this.

[Tools]

Re: Reclaim of broker fee on mortgage

Sorry, I wasn't clear, I understand perfectly what you were asking for, but that does not come across in the letter.

We were not made aware of any percentage/amount of commission paid to the Broker by your company at any any point in time and it certainly is not written anywhere in the Agreement nor were we told orally or in writing on what basis the Broker came about charging us £2500 for his services.

Don't forget they won't really want to tell you, so the above para only informs them that you were not given the info. IMO you should have made it clear, by asking direct questions, what exactly you required from them.

e.g

I request that you supply me with detailed amounts of any commissions paid to the broker, and on what basis, by your company as per section xxxxxxxxx of the xxxxx regulations.

[Ruby]

Re: Reclaim of broker fee on mortgage

He all, just got letter back from GE Money today, please help ....

We would like to bring to your attention that both loans stated above are not regulated by the FSA. As a result we do not need to fulfill the FSA requirements, which you outline in your letter.

In relation to your comment regarding fiduciary duty, this is a point of law to which you have still not fully established that a fiduciary duty existed and provided any evidence in support. Consequently we will not be fulfilling your request for information.

Our letter to them read as follows:- (in brief)

Firstly, we find it strange that an established financial Instution such as GE Money is not aware of the FSA requirements that an Independant Financial Advisor or broker owes their clients a duty of care and full disclosure of any fees and commissions payable to them.

Of course a fiduciary duty existed between the brokers involved in both the above mentioned accounts and ourselves, this is a requirement of the FSA.

These brokers made a claim to us of independance. This led us into a position of trust.

According to the FSA any independant broker or advisor authorised by them to accept payment from clients by fee rather than commission must outline this in the introductory meeting. Advisors who are remunerated by commision cannot call themselves independant.

We were advised at the time of taking out these accounts that only a fee would be charged. On reviewing our accounts details as per our letter dated 28th Ocrober it became clearthat this was not the case.

We were also expecting a breakdown of the brokers fees which was not forthcoming. At the time we were unsure of any recourse or action to take with regard to this.

To that end we again point out that we were not made aware of any percentage/amount of commissin over and above the broker fees that would be charged against the accounts, or the amount of fees to be chaged prior to seeing the agreements.

We therefore require you to provide details of the commision paid to the brokers for each of these accounts and to what extent these commission payments impacted our payments and the interest chages on these accounts.

How is it possible that GE state the accounts were not regulated by the FSA. One account was for £117,000 (including the 2500 broker fee) taken out in November 2002 and the second account was taken out in December 2003 for £17,000 (can't remember the broker fee on that one). I appreciate one being regulated and the other not bit.