Undisclosed commission is a serious problem many consumers are unaware of. If found in contravention of regulations, brokers of loans, credit cards and mortgages could be liable to pay compensation. Learn more about what’s going on, and how you can help clients get the financial compensation they deserve.
How Brokers Are Supposed to Work
Brokers are financial support professionals who act as a middleman between suppliers of money — banks, lenders, etc. — and consumers. The consumer hires the broker as an impartial expert who secures them the best possible deal based on their criteria. This deal might not necessarily be the cheapest — instead, providing clients with the best perks.
The idea of a broker is the borrower employs them, not the lender. Therefore, they have an obligation and a sense of loyalty to the borrower. Brokers should work under the explicit concept of acquiring the very best opportunity for their customers. However, some brokers have been discovered not to be working in this manner.
What Is Undisclosed Commission? And Is It a Problem?
Sometimes, a broker will arrange with a lender to take a commission from an agreed payment made by the borrower. This practice is not uncommon and viewed as a positive way for brokers to build good relationships with financial providers.
When it comes to disclosed commissions, a broker simply informs the borrower that they work with a particular organisation. They then outline the benefits of said organisation. Ultimately, the customer knows of the financial gain for the broker and can use that information to make sure they aren’t being pushed towards the wrong financial solution for them — just because it’s more profitable for the broker.
The problem occurs when the broker conceals the fact they earn commission from some lenders. If they don’t disclose this fact, then they appear impartial — even if they aren’t. This perceived impartially on behalf of the borrower may influence a decision that is not in the customer’s best interests.
The acceptance of undisclosed commission is an immoral and fraudulent practice that leads to borrowers overpaying on loans, mortgages and other financial services — all for the benefit of the broker. As a result, if you can provide evidence of undisclosed commission payments, you can secure compensation for your clients.
What Can Consumers Do about Undisclosed Commission?
As you can imagine, undisclosed commission payments aren’t difficult to prove if you can access the right information.
All you need is details that show a broker did receive payment from a lender for commission of sale, and that the client wasn’t aware of this agreement while using the broker’s services. These details could be:
- Admission of guilt
- Payment history of commission
- Confirmation from the third-party lender
- Written agreements such as emails
Finding the evidence isn’t going to be your biggest barrier — that comes with the initial discovery of fraudulent brokers. The majority of brokers are hard-working individuals who seek the very best services for their clients with complete transparency and are unlikely to be involved in undisclosed commission payments. Not all brokers are assumed to carrying out such practices.
How then, can customers identify potential wrong-doers, so you can start the process of helping them gain the compensation they rightfully deserve through legal investigations?
You don’t need any initial proof to begin an investigation on behalf of your client. All you need is suspected foul play and you can start looking into an undisclosed commission claim. Evidence is usually a history of poor practice or leaked information. In a large historic claim, undisclosed commission was discovered when a legal firm saw documents about payments made that borrowers did not know about.
How to Use Claims Software to Manage Undisclosed Commission Claims
Following the PPI scandal, consumers are becoming much more aware of how financial solutions providers may conduct dishonest practices. As such, claims of all sorts are on the rise, including those for undisclosed commissions. The key to successful compensation is through successful claims management, making sure leads are followed and no stone is left unturned. If you are managing claims on behalf of clients, this means you’ll need support in making sure you have air-tight systems for claims management.
LogiClaim is claims management software custom-built to make life easier and — most importantly — more profitable for claims companies. When it comes to undisclosed commissions claims, it can support your business by:
- Automating follow-ups for information from both lenders, brokers and clients
- Structuring your claims management, so you can see exactly where within the process each of your undisclosed commissions’ claims is
- Quickly allowing for the creation of new claims and, if from previous clients, attachment to their customer records for easy referral
- Enabling the simple creation of bespoke documents unique to your company and claim type, such as Letters of Claim
- And many more benefits.
Discover more about our powerful claims software or get in touch with our experts to discuss how we can introduce our solutions into your claims management business.
