Loan Commission Agreement Template for England and Wales

A Loan Commission Agreement is a crucial legal document that governs the relationship between lenders and financial intermediaries in England and Wales. This contract establishes the terms under which brokers, introducers, or other intermediaries receive commission for successfully arranging loans. Given the heavily regulated nature of financial services in the UK, having a properly drafted agreement is essential for compliance and commercial clarity.

When do you need this document?

You need a Loan Commission Agreement whenever you're establishing a commercial relationship between a lender and an intermediary for loan arrangement services. This includes situations where mortgage brokers arrange property loans for clients, commercial finance brokers facilitate business lending, or introducers refer potential borrowers to lenders. The agreement is particularly important when dealing with regulated activities under the Financial Services and Markets Act 2000, as it ensures both parties understand their obligations and commission entitlements. Whether you're a bank working with external brokers, a peer-to-peer lender using introducers, or a specialist finance company partnering with intermediaries, this agreement provides the legal foundation for your relationship.

Key legal considerations

The commission structure forms the heart of this agreement and must be clearly defined to avoid disputes. You'll need to specify whether commission is calculated as a percentage of the loan amount, a flat fee, or a combination of both, along with when payment becomes due and any conditions that must be met. Regulatory compliance clauses are critical, particularly regarding FCA authorization requirements, treating customers fairly principles, and proper disclosure of commission arrangements to borrowers. The agreement should address data protection obligations under GDPR, confidentiality requirements, and professional indemnity insurance coverage. Termination provisions need careful consideration, including how ongoing commission payments are handled after the relationship ends and whether there are minimum performance requirements or exclusivity arrangements.

Legal requirements in England and Wales

Under English and Welsh law, Loan Commission Agreements must comply with the Financial Services and Markets Act 2000 and relevant FCA Handbook provisions, particularly CONC for consumer credit activities and PRIN for general business principles. If the agreement involves consumer loans, the Consumer Credit Act 1974 and Consumer Rights Act 2015 may apply, requiring additional consumer protection measures and fair contract terms. The FCA requires proper authorization for regulated activities, and commission arrangements must be transparent and not create conflicts of interest that could lead to unsuitable lending. All parties must ensure they have appropriate permissions for their roles, and commission disclosure requirements to borrowers must be clearly understood and implemented. The agreement should also address compliance monitoring, record-keeping requirements, and procedures for handling complaints or regulatory investigations.