A recent Court of Appeal decision in the mortgage sector has highlighted the importance of following the Financial Conduct Authority’s rules on commission disclosure.
The case, Wood vs Commercial First Business, relates to a broker in the mortgage sector who failed to disclose commission to borrowers, which allowed for the recission of credit agreements.
In each case the broker had received a fee from the borrower and commission from the lender. The broker’s terms of business disclosed the fact that commissions may be received from lenders and that the broker would disclose the amount of the commission. The broker failed to do this.
The BVRLA is reminding regulated members that the FCA rules for consumer credit firms and broker firms were changed at the beginning of 2021 and now require firms to disclosure the nature and existence of commission in their financial promotions.
The BVRLA’s factsheet on affordability and pre-contract transparency provides full details on the changes.
