Introduction
In recent years, a significant issue has come to light in the UK’s financial industry, specifically within the second charge mortgage sector. Thousands of individuals who sought financial advice and arranged second charge mortgages through financial advisors have discovered that they were not adequately informed about the existence of undisclosed substantial commission charges. This case study explores the legal implications of such practices and examines a potential solution for affected parties.
Problem: Financial advisors, entrusted with the responsibility of providing transparent advice and acting in the best interests of their clients, charged a disclosed fee to borrowers. This created a fiduciary duty between the advisor and the borrower. However, unbeknownst to the borrowers, lenders were also paying substantial commissions to the advisors behind the scenes. These hidden commissions were not disclosed to the borrowers, potentially causing detriment to their financial interests.
Legal Context and References:
- Fiduciary Duty: Under UK law, financial advisors owe a fiduciary duty to their clients. This duty requires advisors to act in the best interests of their clients and disclose all relevant information that may impact their financial decisions. Failure to disclose material information, such as undisclosed commissions, may breach this duty (Reference: Keech v. Sandford, [1726] EWHC Ch J76).
Solution
To address the issue of undisclosed commissions in the second charge mortgage industry, our Rapid Raise Two litigation funding product has been introduced. This innovative funding solution offers an automated process for potential claimants, enabling them to seek legal redress efficiently and collectively under a unified scheme. By leveraging this funding product, law firms can expedite the litigation process while benefiting from streamlined operations.
Detailing the Solution:
- Automated Funding: The Rapid Raise Two litigation funding product streamlines the funding process for potentially thousands of claims. It enables claimants to access financial support in a more efficient manner, reducing the burden on individual claimants and ensuring widespread access to justice.
- Digital Application Process: Law firms can leverage the digital application process provided by the Sentry Portal. This allows them to apply for litigation funding, secure the necessary funds, and initiate the drawdown process seamlessly. The digital nature of the process enhances efficiency and reduces administrative burdens for both the law firms and the claimants.
- Application to drawdown in less than 15 days: Through Rapid Raise Two, law firms can benefit from a significantly accelerated timeline. They can secure litigation funding within a remarkable 15-day period, expediting the legal proceedings and providing claimants with swift access to justice.
Conclusion
The introduction of the Rapid Raise Two litigation funding product has offered an efficient and effective solution to address the issue of undisclosed commissions in the UK’s second charge mortgage industry. By leveraging this digital funding process, law firms can expedite the litigation process, providing claimants with access to justice and the opportunity to seek appropriate compensation for the harm caused by undisclosed commissions. This case study highlights the importance of transparency in financial transactions and emphasises the significance of legal remedies in protecting the rights and interests of borrowers.
Note: While this case study provides a general overview, it is important to consult with legal professionals and refer to relevant laws and regulations for specific legal advice in cases involving undisclosed commissions in the UK.
December 6, 2020
Case Studies
