Below is an update from Tandem Home Loans. Contact our team today for more information.
Announcement
Commission Disclosure
Following last Friday’s Court of Appeal judgement in the Johnson, Wrench and Hopcraft case, we are enhancing our processes to ensure we clearly draw our borrowers’ attention to the commission payments that we make to our broker partners.
Our commission payments have always been clearly disclosed in our ESIS and Mortgage Offer, but, in addition, all borrowers will be required to confirm that they consent to the commission payment being made.
What action do you need to take?
For all applications with an ESIS dated from tomorrow, 6th November 2024 , a signed commission disclosure and consent form will need to included with the application pack submission to us. This is a mandatory item, and the correct form needs to be on file before a mortgage offer is issued.
The disclosure and consent form is now part of the Application/ESIS pack download from our broker portal and will display the commission amount relative to the ESIS generated.
If you need a standalone editable copy of this form, please contact your BDM.
The Case and Judgement
The full legal text of Johnson, Wrench and Hopcraft may be found here. Reports on the judgment have focussed on the impact for the motor finance industry but has implications for all intermediated transactions.
Key points from the judgement include:
- That a fiduciary duty exists in a wider range of circumstances, including B2C, B2B, regulated and unregulated markets across all financial products.
- Where commission is payable, there is a duty to disclose the existence, nature, and amount of commission to the borrower.
- Creates a duty to obtain the customer’s informed consent prior to payment of the commission.
- Applies a high standard to the test of whether informed consent has been given.
These findings are not restricted to the motor trade and appear to apply regardless of the nature of any commission model.