Undisclosed Commission Claims

Undisclosed commission claims, also known as secret or hidden commission claims, are increasingly prevalent in competitive industries where transparency, clarity and trust are paramount. These claims arise when a commission, paid as part of a business arrangement, is not disclosed to all parties involved. Such non-disclosure can lead to serious legal disputes, especially if the undisclosed commission influences the outcome of a loan or finance agreement, a sale, or any other contract.

At JMW, our experienced team specialises in defending businesses, suppliers, third-party intermediaries such as brokers, and financial institutions facing undisclosed commission claims. We understand the complexities of these claims, whether they involve hidden commission payments in energy supply contracts, broker commissions in finance agreements, or other secret commission disputes such as in the insurance or property sector. Our expertise ensures that our clients receive impartial advice and robust representation, safeguarding their interests in court proceedings, tribunals or during investigations.

If your business is dealing with allegations of secret commissions, particularly in high-stakes sectors such as insurance, finance, or real estate, JMW is here to help. Our focus on defending against such claims, coupled with our thorough knowledge of industry practices and regulatory frameworks, positions us as a leading law firm for undisclosed commission claims.

For legal support with undisclosed commission claims, call us on 0345 872 6666, or fill in our online contact form to request a call back.

What Are Undisclosed Commission Claims?

Undisclosed commission claims, also referred to as secret or hidden commission claims, occur when a party involved in a transaction, such as a broker, receives a commission that is not disclosed to the other parties. This lack of full and frank disclosure can lead to significant legal issues, especially when the commission impacts the terms or fairness of a finance agreement, mortgage or other financial product.

Such claims often revolve around breaches of trust, where one party alleges that the non-disclosure of commission payments created an unfair relationship or resulted in a mis-sold financial product. For instance, in loan agreements, a broker may receive a commission from a lender without informing the borrower, potentially leading to higher interest payments or less favourable terms. This can be grounds for a secret commission investigation and subsequent claims under laws like the Consumer Credit Act.

The legal implications of undisclosed commissions can be significant and there are a number of possible remedies available.  For example, a secret commission payment may be treated by the law as a bribe, which is recoverable by way of a claim for restitution (‘money had and received’). Alternatively, claimants may seek compensation (usually a sum equal to the amount of the commission plus interest) for hidden commission payments by arguing that the non-disclosure constituted a breach of fiduciary duty or fraud. In addition, where the commission is fully secret (i.e. the claimant knows neither the fact of the commission nor the amount), they will be entitled to rescind the contract made with the payer of the commission.  These claims are complex and fact-sensitive, and can involve multiple parties, including brokers, lenders and claims management companies.

At JMW, we have experience in defending against such claims and protecting our clients - who might be insurance brokers, finance brokers, suppliers, agents, lenders or other businesses - from unfounded allegations. We provide a comprehensive defence strategy that takes into account the facts of each case, including the advice, information or recommendations that have been given, and the extent of any non-disclosure.

Our Undisclosed Commission Claim Services

Defending against undisclosed commission claims requires a nuanced understanding of both the legal landscape and the specific industries in which these claims arise. At JMW, we specialise in crafting robust defence strategies tailored to protect businesses, financial brokers, and other professionals from the potentially damaging consequences of secret commission allegations.

When defending against these claims, we start by thoroughly investigating the circumstances surrounding the commission payments. This includes reviewing all relevant loan agreements, finance agreements, contracts and written communications to determine whether the commission was (partially or completely) undisclosed, the extent of any fiduciary duties owed and whether any such duties were breached. We assess the full and frank disclosure provided to all parties and examine whether the commission was in line with industry standards and regulatory and legislative requirements.

Our experienced team at JMW can employ a range of defences based on the specifics of each case. For instance, we may argue that the commission was disclosed in a manner consistent with regulatory guidelines or that the claimant was aware of and gave informed consent to the commission. In cases involving complex financial products or multiple group companies, we meticulously analyse the flow of payments to demonstrate that no fraudulent practice occurred and that the interests of all parties were upheld.

We also focus on mitigating the impact of these claims by addressing any potential unfair relationship allegations and demonstrating that our clients' actions were always in their customers' best interests. By providing evidence of informed consent and demonstrating that the commission payments were fair and reasonable, we aim to minimise any liability and prevent unwarranted compensation claims.

At JMW, we recognise the importance of early intervention and a proactive approach in defending against undisclosed commission claims. Whether you are facing a claim related to a mortgage, personal loan, supplier contract, or any other financial agreement, our dedicated team is ready to protect your business with expert legal advice and representation.

What Industries Are Affected by Undisclosed Commission Claims?

Undisclosed commission claims can arise across a wide range of industries, particularly in sectors where intermediaries play a crucial role in transactions. Each of these sectors has seen significant scrutiny regarding secret commission practices, leading to increased legal challenges for businesses.

• Financial services: The financial services sector has long been at the centre of undisclosed commission claims, particularly with products like personal loans, car finance loans and PPI policies. In these cases, financial brokers may receive commissions from lenders, which are not disclosed to the borrower. This can lead to claims that the loan agreements or finance agreements were unfair or that the borrower was misled.
• Insurance: Insurance premiums, particularly those related to insurance policies associated with mortgages, building safety, buildings, terrorism, multi-occupancy buildings and secured loans, are also susceptible to undisclosed commission claims. For example, brokers involved in arranging buildings insurance policies on behalf of landlords or their property managing agents, receiving commissions from insurers without informing the leaseholders. This lack of transparency can trigger legal disputes, especially in cases involving large sums or where the policyholder believes they were misled about the cost or benefits of their coverage.
• Energy: Energy brokers receiving commissions or rebates from energy providers in connection with gas and electricity contracts, which are not disclosed to the ultimate consumers/business customer. These undisclosed commissions can result in higher tariffs or fees being passed on to those consumers.
• Real estate: In the real estate industry, undisclosed commissions can occur in property sales, leasing agreements or mortgage arrangements. Real estate brokers or agents may receive commissions from third parties, such as lenders or developers, without informing their clients. This can result in claims that the broker failed to act in the client's best interests, leading to financial losses or less favourable terms. Cases involving hidden commissions in real estate often involve complex contractual relationships and require detailed legal analysis.
• Emerging areas: Beyond these established sectors, undisclosed commission claims are increasingly emerging in other industries as well. For instance, the rise of digital platforms and fintech services has introduced new types of financial products and agreements, where rules about the disclosure of commissions may not always be clear. As the market continues to evolve, businesses must be vigilant in ensuring that all commission payments are fully disclosed to avoid potential claims.

At JMW, we have an in-depth understanding of the specific challenges faced by businesses in these industries. Our expertise in defending against undisclosed commission claims spans multiple sectors, allowing us to provide tailored legal advice and representation that meets the unique needs of each client.

What Are the Potential Defences Against Secret Commission Claims?

Defending against secret commission claims requires a strategic and well-informed approach, as these cases often involve complex legal issues and detailed scrutiny of business practices. Below are some of the key defences that can be employed when facing allegations of undisclosed or hidden commissions.

• Full disclosure: This involves providing evidence that the commission was clearly outlined in the relevant documentation, such as loan agreements, finance agreements or other contracts. Demonstrating that the client was informed about the commission terms will often nullify claims of complete non-disclosure.
• Informed consent: If the commission was disclosed and it can be shown that the party claiming to have been wronged gave informed consent (i.e. agreed to it), this can serve as a strong defence. Informed consent means that the party was fully aware of the commission arrangement and understood its implications. This defence is particularly effective in cases where the claimant alleges that they were misled or unaware of the commission payments.
• Compliance with regulatory standards: Another key defence is showing that the commission payments were made in compliance with all relevant regulatory standards, such as those set out in the Consumer Credit Act or other industry-specific regulations. By proving that the commission practices adhered to legal and regulatory requirements, businesses can argue that there was no breach of duty or unfair relationship.
• Fair market practice: In some cases, it may be argued that the commission was consistent with standard market practices and did not constitute an unfair advantage or secret profit. If it can be shown that the commission was typical for the industry and that similar arrangements are common, this can undermine claims that the commission was hidden or improper.
• Limitation periods: Legal claims are often subject to limitation periods, meaning they must be brought within a certain timeframe. If a claimant brings a secret commission claim after the relevant limitation period has expired, it may be possible to have the claim dismissed on these grounds.
• No causation or loss: For a secret commission claim to succeed, the claimant must typically demonstrate that the non-disclosure of the commission caused them a loss. A strong defence can be built by arguing that even if the commission was not disclosed, it did not result in any financial loss or detriment to the claimant. This may involve showing that the terms of the finance agreement or other contractual arrangement were not adversely affected by the commission, or that the commission itself was inconsequential.
• Contractual defences: Many contracts include clauses that limit or exclude liability for certain types of claims. If a contract contains a provision that addresses commission payments or the disclosure thereof, this can be used as a defence against a claim.

At JMW, we leverage these and other defences to protect our clients from the potentially severe consequences of undisclosed commission claims. Our approach is always tailored to the specific facts of the case, which ensures that we present the strongest possible defence in court proceedings or during settlement negotiations.

Why Choose JMW?

When defending against undisclosed commission claims, having a skilled and experienced legal team on your side is vital. JMW offers unparalleled expertise in defending businesses, financial brokers and other professionals against allegations of secret or hidden commissions.

Our commercial litigation and dispute resolution team is one of the most highly regarded in the UK. With a proven track record in handling complex disputes across various industries, and we pride ourselves on employing effective resolution techniques that move clients towards their desired result. We will provide expert guidance on even the most complex cases, with a focus on minimising any day-to-day disruption for your organisation.

A number of our partners have been ranked in leading legal directories such as Chambers & Partners and the Legal 500. This reflects our strong track record of success in defending clients in high-stakes disputes, and achieving favourable resolutions that protect our clients' reputations and financial interests. Our reputation for excellence in commercial litigation is evident in the long-standing relationships we maintain with our clients.