Were you referred to Level, Novitas, Detach, Integro, Therium, Axiom, Ratesetter, Paragon, Rhea for a 'divorce loan'? Documentary shout out

[Orrace]

In 2018 I started a thread asking anyone if they'd been referred to Novitas or Ratesetter for a 'litigation loan' or 'living expenses loan' by their family lawyers and been harmed by this, as I had.

A number of mums contacted me, and among that group were mums who had been made homeless, faced bankruptcy, and ended up with crippling debt, in addition to no resolution to their family law case. The loans simply added another layer of complexity and another layer of litigation, despite eyewatering legal fees for divorces judges in the FC described in judgments as 'straightforward', fees topping the half a million mark in some cases, the assets being divided were often only a family home, which had increased in value of the period of the marriage. These half a million plus divorces were NOT HNW, not even close, and despite these fees all the women who contacted me ended up with no end to the family case in sight, as litigants in person, being pursued relentlessly by litigation loan companies, and trying to sell homes that their former partners or spouses could prevent the sale of...

Everyone one of the women who contacted me who had a Novitas loan has since succeeded in receiving a refund of interest, fees and charges - and I include myself in that number.

What was shocking is that people on the thread identifying themselves as family lawyers described me as a 'tinfoil hatted crusader'... But as the Financial Ombudsman, the Legal ombudsman, and the Legal Services Board upheld complaints against lenders and the 'magic circle' lawyers in that case, it seems maybe they were the ones in the tinfoil hats.

I'm posting again because we have a very reputable broadcast journalist interested in covering the issue of high interest, unregulated and - I can say it now MIS SOLD litigation loans in divorce. I can say these loans were mis-sold because the Financial Ombudsman has said they were...

Even Resolution, in a report which was contributed to by ALL the lawyers who sold us our loans, acknowledge these are harmful, we want this area of finance to be stringently regulated, to protect the vulnerable cohort to whom they are being sold, and to ensure they are a very last resort.

Please reach out if you have been referred to a litigation loan or living expenses loan by your family lawyer.

To be clear, we are a group of mostly mums negatively impacted by this form of finance, we want to see it exposed, regulated and controlled so no family faces the harms we have faced.

The below resolution report highlights the harms these high interest loans cause.

resolution.org.uk/wp-content/uploads/2024/10/Resolution_DAFRP_Report_ONLINE.pdf

If you would like to contribute your story to the documentary anonymously that's fine, or if you'd like to be named that's also fine...

I was a 'customer' of one of the companies you mention, referred by my solicitor while separating from my partner. All I can say is it was an absolute nightmare from beginning to end. I was told everything would cost a relatively small amount, but the loan was secured on my home, asecond mortgage my solicitor knew how much was available, spent it ALL (in my opinion unnecessarily) and when that ran out asked the lender for another loan. I'll give more details but yes the whole process was very damaging for both of us and our child suffered too. easy to say with hindsight, but I shouldn't have taken out the loan and found another way to pay for what I hoped would be short sessions of mediation. I think the problem with these loans is the solicitors know how much is available to spend once the loan's been securd on the house, and then set about spending all of it. This has also happened to other people I know.

Thank you Anna Primrose, you say that you shouldn't have taken out the loan, but if your solicitors said it was what you should do, and you're paying them to give you the best advice, and look after your best interests, why would you not do what they suggest? IME with lots of others they frame it in one way when they speak to you, you don't see how they have framed it in attendance notes, so you don't get a chance to challenge what they put, and they frame it very differently in written correspondence, saying, for example 'we're not referring you'. I think they were referring people, and FOS decisions support that they were even when they say they weren't. Your point about them looking at how much equity you have and then taking a predetermined slice, determined not by the case but purely by what cash is available in the loan, is also the experience of others, in fact one litigation lender went so far as to say they would take up to a third of all equity...

So not just the loan aspect but poor advice - in fact possible negligence in the conduct of the matter? What does the legal ombudsman say about that?

Yes, exactly — it’s not just about the loan itself, but the broader issue of poor legal advice and potentially negligent conduct throughout the handling of the matter. The Financial Ombudsman Service (FOS) findings have highlighted that some solicitors failed in their duty of care by not properly explaining the terms and implications of the Novitas loans to clients, or by pushing clients towards funding arrangements that were neither necessary nor in their best interests.

As for the Legal Ombudsman, they can and do investigate complaints about poor service from solicitors — including issues relating to negligence or a failure to act in the client’s best interests. If the solicitor didn’t explain alternative funding options, failed to advise on risks, or proceeded without informed consent, these are all grounds for a complaint.

In some cases, the Legal Ombudsman has awarded compensation or referred matters for regulatory review. That said, where actual negligence (as in breach of duty causing financial harm) is suspected, it might also justify a civil claim against the solicitor for professional negligence.

This situation really straddles both complaints and legal remedies, and it’s encouraging to see some findings starting to reflect the seriousness of what went on.

Hi Undercover4ever, the Legal Ombudsman took years (from 2018 to 2024 for their investigation into one of the law firms... Paine Hicks Beach, if you want to know) they found the firm had failed on multiple levels, and I was awarded £16k+ refund of fees and compensation for harm caused... BUT the harm caused was severe enough that within days of the LEO decision I was hospitalised due to the negative impact on my mental health, and when I was recovered I asked to accept the award (which included 10% of fees which the LEO deemed were overcharged, so charged illegally) the LEO said I'd left it too long, and PHB kept the money... Meanwhile The investigation into Stewarts Law went on for years too... they sold me the Rapesetter loan, taking £50k in advance of any fees charged without my knowledge or consent.... There was an initial ombudsman decision which upheld some complaints, but only awarded me a laughable amount - I rejected it a second ombudsman decision found that the firm had not done a very good job , but they hadn't failed hard enough to merit any sanction, I rejected that, and provided additional evidence that demonstrated the firm had misled the LEO, the LEO then took offence at my attitude, apparently they didn't like the fact I said they were defending stewarts... they WERE defending Stewarts, or that I'm active on Social Media (the LEO actually follow my twitter feed... what a waste of LEO time that is!) and decided they would not finish the investigation... .so after approx 5 years they simply swept it under the carpet! The FOS found the loans unfair and unaffordable.

i have large litigation loan and the interest rate is just starting to hit me and I’ve realised the interest will likely double the size of the loan before finances reach final hearing..my stbxH refused to settle at FDR so I have no option but to list for a final hearing which I’ve been told won’t happen until next year so for more than 6 months nothing will happen on my case but the interest keeps growing..In my opinion it is a huge failing of the legal process that women in my situation are not able to access/use assets to fund divorce proceedings. It should be possible to receive an interim lump sum when there is money within the marriage (in my case stbxH put all money into his sole account). It enables so much financial abuse to perpetuate long after the marriage has ended and puts the weaker party in a very difficult position during the negotiations.