UK: Broker breached fiduciary duty by not disclosing sum of commission received

The Court of Appeal has held that a credit broker was in a fiduciary relationship with borrowers, with the consequence that the broker reached its fiduciary duty when it failed to inform the borrowers of the size of commission it received from the loan and PPI providers involved. As a result, the credit provider had to account to the borrowers for those commissions. 
 
The court found that the duty had been breached despite the existence of both:

1. clear statements in the contractual documentation to the effect that the broker was providing information only and not advice; and
2. disclosure of the fact that the credit broker was likely to receive commission for the sale.

It should be noted that the Court of Appeal commented that this case was a "very unsuitable vehicle" by which to resolve the issues of principle involved due to the fact that the defendant (which was in liquidation) was unrepresented.

To read more from our team about the case and its implications, click here.