- An end to secret commission, provided you can provide restitution (Pengelly v Business Mortgage Finance 4 plc)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Commercial analysis: The High Court has levelled serious criticism at the practice of undisclosed commissions given to mortgage brokers. The court held that an undisclosed commission from lender to broker (borrower to broker either was disclosed or wasn’t an issue) was not merely ‘half secret’ commission, but a secret commission or a ‘bribe’ (see para ). The result of having an undisclosed commission from lender to broker was to invalidate the mortgage. That is a dramatic outcome which will be of concern to the vast majority of lenders and of tactical value to a large number of litigants. The case also acts as a stark reassertion of the importance of, and the willingness of the court to recognise, fiduciary duties. The lower court had considered, but dismissed a fiduciary duty arising between a borrower and a broker. This case is a reminder that the High Court will recognise them. Written by Steven Barrett, commercial chancery barrister, at Radcliffe Chambers.
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