G E Money and Secret Commissions

[frettful38]

Well I know this has probably been read more times than I've had hot dinners, but thought it needed another look,

 

Financial institutions briefing

Commission disclosure in retail markets

The Court of Appeal requires informed consent

The recent publication by the FSA of its first

paper following commencement of its Retail

Distribution Review and its review of the

sub-prime mortgage lending market has

generated considerable press interest.

While the FSA's findings in these areas

drew attention to the importance of

implementing consistent lending and

affordability guidelines and criteria,

commission arrangements between

financial intermediaries, lenders and

borrowers were also the subject of

comment.

The FSA's focus on commission arrangements is not a

new one, but is a continuing demonstration of its

determination to ensure its principle of Treating

Customers Fairly is implemented in all sectors of the

financial services industry. What is of particular note is

that these findings by the FSA have coincided with a

recent Court of Appeal judgment in Wilson -v-

Hurstanger which has sent a clear warning about the

way in which insurers and lenders pay commissions to

intermediaries.

The borrowers applied for a loan from Hurstanger

through a broker. Upon receipt of their loan

application from the broker, Hurstanger sent the

borrower documents to be signed. One of these

documents explained that in certain circumstances the

lender paid commission to brokers/agents. No further

information relating to the details, nature or

implications of the commission was provided.

The Court of Appeal held that the borrower retained

the broker to act as their agent for a fee and that the

relationship created was a fiduciary one. As a fiduciary

the agent was required to act loyally for the

defendants and not put himself in a position where he

had a conflict of interest. By receiving commission

from the lender the broker put himself in a position

where he had a conflict of interest.

The Court of Appeal found that the lender did not pay

the broker a secret commission, as the existence of

the commission was disclosed but the lender did

procure the broker's breach of fiduciary duty by failing

to obtain the defendant's informed consent to the

broker acting in the way he did. The defendant

(lender) was ordered to return the commission to the

borrower with interest although the Court of Appeal

declined to set aside the loan itself. In this regard the

Court did not change the law but merely applied and

clarified the common law in relation to fiduciary duties

of agents.

The Court of Appeal recognised that previous case law

did not require an agent to disclose to his principal the

amount of commission he is to receive from the other

party. However, in relation to the non-status lending

market the Court of Appeal relied heavily on guidance

from the Office of Fair Trading and found:

"Here I think the requirement is more special.

Borrowers like the defendants coming into the nonstatus

lending market are likely to be vulnerable

and unsophisticated. A statement of the amount

which their broker is to receive from the lender is,

I think, necessary to bring home to such borrowers

the potential conflict of interest."

Conclusion

It is clear from Wilson -v- Hurstanger that lenders,

insurers and intermediaries in the non-status retail

markets and, given the FSA's recent observations,

arguably those involved in the wider retail distribution

market, must ensure that their procedures dealing

with commission disclosure are as transparent as

possible both as to their existence and potentially to

their precise amount and that informed consent is

obtained from customers if a commission is to be paid

by the lender or insurer to an intermediary acting on

behalf of those customers.

[nevos]

The commission is paid out of the lenders money, not the amount you are getting from the lender.

As long as you are aware of the broker fee you are paying, should it really matter if they were paid commission?

 

It matters when it is not properly disclosed IMO

 

Reading some horror stories about GE and it's First National product range. One lady in particular borrowed £3K then they added £5'Ks worth of interest. Others didn't realise how front loaded the loans were.

 

GE Money Home Lending have already been fined by the FSA £1,120,000

 

Read the FSA report here

 

Definitely read the small print with these people

 

Story here

[AA99]

GEMoney/Carcraft fixed sum loan has been sold to Link, who in turn have asked ME to email them all my correspondence because they know nothing about the account they've just bought. None of the figures in my contract from GE add up! Suppose there's some commissions bundled up in there too:eek:

 

http://www.consumeractiongroup.co.uk/forum/general-debt-issues/161277-aa99-ge-money-car.html

[frettful38]

We should make secret commissions front page headlines, lets see what these institutions come up with a defence. The more of us who know about this the better, I bet there are thousands out there who have been victims of this,

If secret commissions became as big as the bank charges and OFT case then we would see a proper collapse

[HomerJSimpson]

We should make secret commissions front page headlines, lets see what these institutions come up with a defence. The more of us who know about this the better, I bet there are thousands out there who have been victims of this,

If secret commissions became as big as the bank charges and OFT case then we would see a proper collapse

 

 

There are companies touting in the national press that if you have had a loan from Igroup, First National or GE Money that you may well have a claim to compensation. Do the touts know anything that we don't?

[frettful38]

Where were these companies before all this financial crisis kicked in. I bet most of them are these institutions in disguise. They want to see what evidence people have against them and when they have had a good look at any loan agreements or cca agreements they tell you have not got a case. I bet if I was to start proceedings against my lender for paying a secret commission I would win but am a bit reluctant and the only thing stopping me doing this is that what are my chances if they turn around in retaliation and call in their loan as it is still live.

Apart from that there is nothing else standing in my way of reclaiming this secret commission they have paid my broker Ocean Finance

[andrew1]

I think the fear people have as fretfull says is that the loan company will indeed turn this around and ask for their money back, but this is where CAG must come in with their usual degree of tenacity and find a route to make sure this does not happen as it is blackmail. Fraud on the one hand-blackmail on the other.

 

Lets lay out the why's and wherefores explore the hurdles and thrash this out just like everything else we do so successfully on here.

 

FEAR is not in the CAG dictionary - it translates as - CHALLENGE...

 

For starters:

 

Q) Why is it possible for the loan company to turn this around on us,

a)what are the fears?

b) what are the laws they are using?

c) how do we counter that?

A) ?

[frettful38]

Excellent piece of advice & information andrew1. So whose going to be the first one to take on these institutions regarding secret commissions. I know what to do and how to do its when should I do it.

 

Andew1, the words you have used are perfect, fraud and blackmail. This is what these companies use to frighten and intimidate the average guy/girl.

I think maybe the advice from a solicitor would be a good start, for example if I wanted to take on my lender then what are my chances of them calling in my loan. I need to know where I stand legally and strongly before I start booking a holiday , (wishful thinking hey)

It's like whose going to jump the plank first off the pirates ship, my kness are wobbling just thinking about it:p

 

I think I should seriously sit down and start studying the law and see what rights I have don't you agree folks?

[Guest suziedarkness]

The commission is paid out of the lenders money, not the amount you are getting from the lender.

As long as you are aware of the broker fee you are paying, should it really matter if they were paid commission?

 

 

It may appear to be paid out of the lenders money but it is reflected in the APR we are charged so therefore it is paid for out of our money and chances are if as in my case, I paid a Brokers Fee which I was aware of and a secredt commission which I was not aware of, We pay these charges 3 times over!!!!!

[elizabeth1]

I think the fear people have as fretfull says is that the loan company will indeed turn this around and ask for their money back, but this is where CAG must come in with their usual degree of tenacity and find a route to make sure this does not happen as it is blackmail. Fraud on the one hand-blackmail on the other.

 

Lets lay out the why's and wherefores explore the hurdles and thrash this out just like everything else we do so successfully on here.

 

FEAR is not in the CAG dictionary - it translates as - CHALLENGE...

 

For starters:

 

Q) Why is it possible for the loan company to turn this around on us,

a)what are the fears?

b) what are the laws they are using?

c) how do we counter that?

A) ?

 

 

I think this is where we need to look into Subrogation of Loans - I have a feeling that these companies shouldn't be asking for subrogation of loans in such circumstances playing on peoples fears.

[andrew1]

I think this is where we need to look into Subrogation of Loans - I have a feeling that these companies shouldn't be asking for subrogation of loans in such circumstances playing on peoples fears.

 

Okay young lady, laymans/womans terms - explain to everyone what you mean by

" Subrogation of Loans " for those who don't fully understand...we need this thrashing out so EVERYONE understands in the context of their loan documentation...

 

 

Sarah

[elizabeth1]

Okay young lady, laymans/womans terms - explain to everyone what you mean by

" Subrogation of Loans " for those who don't fully understand...we need this thrashing out so EVERYONE understands in the context of their loan documentation...

 

 

Sarah

 

I'm not sure if this link helps explain subrogation - there is some explanation so people can read about it and some cases as examples to read through.

 

 

Property Law UK

 

What is subrogation?

 

Subrogation is not a right or a cause of action, but an equitable restitutionary remedy against a party who would otherwise be unjustly enriched.

 

In a typical re-mortgage situation, it enables the later lender to �stand in the shoes� of the earlier lender and enforce its security as if it had the benefit of the earlier charge.

 

In short, lender B whose mortgage is used to discharge a prior mortgage in favour of lender A, is subrogated to the rights of lender A. There is a little more to it than that.

[andrew1]

Thank you Elizabeth1, that explains it very well So,

 

what we are saying is that GE are applying for subrogation in that they wish to recall their loan because we are making a claim saying that the transaction was entered into fraudulently by the broker and should never have happened. - or are we? - If that is the case then the finance company take things back to the previous position where you didn't have their money and the deal never struck. By claiming 'subrogation' they want their money back they lent.

 

Maybe we are just saying the broker acted fraudulently - then what?

 

Do we just want the additional cost to us returned or do we wish to acknowledge their contention that the loan should not have happened if we are claiming fraud?

 

Would they get away with subrogation and are there any case laws where they/anyone has?

[nevos]

A Broker/Lender needs to have the borrowers written consent that they agree to the commission payment. If this is not sought, it is classed as a secret commission ans the broker is seen to be breaking his fudiciary (sorry cant spell), duty and it is viewed as a form or bribe or fraud.

 

I came across a rather interesting thread on another forum. It becomes rather heated, worth a look Secret Commissions? - MoneySavingExpert.com Forums

 

suzie

 

Interesting

[frettful38]

I have just had an interesting reply from my lender, give me a sec I will post up

[frettful38]

Any ideas on what I should reply?

 

I wrote asking them did they pay a second commission to the broker

 

Edited April 11, 2009 by frettful38
details missing

[frettful38]

Edited April 11, 2009 by frettful38

[frettful38]

I have all arrears cleared as of yesterday with BF, so they can't throw that at me if this was to go far.

It reads in the paragraph that the lender has no objection if the borrower asks the broker for details on any commission. That's funny because I did ask the broker Ocean Finance if they received a second commission and this is what they replied. Now I feel like a tennis ball being served between the broker and the lender,

I sent two letters to my broker specifically asking about secret commission and below was their reply.

BTW you reckon I'm getting charged £35 a letter for asking questions

 

http://i450.photobucket.com/albums/qq223/sophiak_bucket/CCF11042009_00000-1.jpg

[Guest suziedarkness]

Fretful, forgive me if you have answered the following questions already on this thread, I havent gone back over it and my memory is dreadful

 

With regard to your lender, can you answer me the following:

 

1) Did you receive a mortgage offer prior to signing on the dotted line, and if so what did it say about broker fees/commissions?

 

2) did you receive the FISA booklet mentioned by the lender with this offer? what does it say about broker fees/commissions

 

3)Have you SAR the broker or lender, if so, have they included the underwriting sheet and what does that say about fees/commissions?

 

4) Were you advised once the loan was taken out how the loan was disburesed and is it all accountable or does there seem to be an unexplained shortfall?

[Guest suziedarkness]

In my case, the mortgage offer did mention the broker fee and how much it was but on the Broker commission it stated £0.00.

 

In the mortgage booklet they sent with the offer, it says that they may pay a commission to the broker but it must be notified to the lender and if it is over £250 (I think) the broker must obtain the borrowers written consent.

 

I never signed didly squat about commissions.

 

Then on the letter I had from GE after the loan was taken out, it breaksdown how the loan was disbursed and mentions the broker fee as before, but it also lists another amount of nearly £5,000 to the same broker which I knew nothing about.

 

Funny how when I SAR GE money, they omitted to include all this relevant paperwork, lucky for me I managed to dig out all the originals.

 

GE and many other companies along with them are on a sticky wicket and it is only a matter of time before they come unstuck. They can only pass the buck for so long, and with brilliant sites like this that make us consumers aware of their unscrupulous behaviour, the net is closing in on them!

[frettful38]

Hi suzie to answer your questions

 

I never received a FISA booklet from the broker ever. This is not a mortgage but a secured loan that I took out. I sent a S.A.R to Blemain (lender) & broker (Ocean) and in the S.A.R from Blemain I found the Underwriting Sheet. Maybe this was included by mistake I don't know. As far as I can see there is no unexplained shortfall. But the second commission paid to Ocean by Blemain has got to have been added in my total loan somewhere,

I am not giving up on this and admit there is a lot of investigating to do here and I will get to the bottom of it somehow.

[Guest suziedarkness]

Fretful, does the underwriting sheet not give any figures to Ocean?

 

As far as I am aware, and i am sure someone will correct me if I am wrong, if your loan was secured, you should still have had the FISA booklet.

[Bizzimum]

I have a secured loan and I got my FISA booklet 3 years after taking out the loan. It arrived with my loan application form:confused:.

[Guest suziedarkness]

Bizzimum, Bet they didnt wait 3 years to start collecting their payments!

 

who is your loan with?

 

Suzie

[elizabeth1]

Thank you Elizabeth1, that explains it very well So,

 

what we are saying is that GE are applying for subrogation in that they wish to recall their loan because we are making a claim saying that the transaction was entered into fraudulently by the broker and should never have happened. - or are we? - If that is the case then the finance company take things back to the previous position where you didn't have their money and the deal never struck. By claiming 'subrogation' they want their money back they lent.

 

Maybe we are just saying the broker acted fraudulently - then what?

 

Do we just want the additional cost to us returned or do we wish to acknowledge their contention that the loan should not have happened if we are claiming fraud?

 

Would they get away with subrogation and are there any case laws where they/anyone has?

 

Does this not go back to what I posted in this thread - page 4 post 61 ??

 

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/171037-multiple-agreements-falling-within-4.html

 

Seems to me the lender wants it both ways - they want things to go back to "as though the loan never took place" - lets them neatly off the hook if this happens?

 

It's all funny business if you ask me