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About the loan

What can the loan be used for?

The loan is regulated under the Consumer Credit Act 1974, and can be used solely to pay for any disbursements associated with your clinical negligence or personal injury legal proceedings, for example court issue fees, medical reports and GP records. 

We fund all or part of a case.

How does the loan work?

The loan is a pre-approved facility. The money is drawn down as it is needed and paid directly to your solicitor to reimburse them for disbursement costs associated with your case. You do not have to use the entire loan amount and interest only accrues once the money is sent to your solicitor’s account. So, while funding is always available, you only pay for what is used.

The loan contract is between you and Novitas. Your solicitor has an obligation to communicate to us any material facts that may affect repayment of the loan during your case and to pay off the loan from any proceeds received as part of your settlement. The remaining amount will be passed on to you.

An insurance policy is in place to cover repayment of the loan in the event your case is not successful.

How much does the loan cost?

Our charges are transparent and straightforward.

If your case is lost, you do not have to pay anything. If you win Novitas is repaid from your award. This will include: 

  • An administration fee of £75 for each of the first five amounts drawn down from your loan. This is taken directly by Novitas and added to the amount drawn down.
  • An interest rate of 15% per annum on any amounts drawn down. Interest is only charged on the money drawn-down, not the whole facility. 

Recent legal precedent may make a proportion of the interest recoverable from the other side. This is not guaranteed however. You should assume that the interest is to be repaid from your settlement.

Interest is accrued only on the money you use and calculated at a fixed rate of 15% per annum or 1.25% per month (not compounded), and due only when your case is complete and at loan settlement. 

We take the annual interest rate of 15% (1.25% per month), multiply by the amount of the facility they have drawn and divide by the number of days that the money has been drawn down. For example, if you use £10,000 for 6 months, you will pay back interest of £774.

Representative example:  

Total Amount of Credit: £100,000
Total Charge for Credit: £22,455 includes:

  • £75 administration fee
  • £22,455 loan interest (assumes full loan amount drawdown on day 1) 

Rate of interest: 15% per annum (fixed)

Duration: 18 months

Total Amount Payable: £122,530
Representative APR 15.1%

How long do I have to repay the loan?

The agreement has no fixed duration, but will last at least 12 months. Your loan must be repaid when your case concludes.

Do I have to have insurance?

Yes. Your loan must be covered by a Recourse Policy Schedule which will repay the loan if your case is not successful.

How is the insurance arranged?

Your solicitor will arrange the insurance with our approved insurer. The cost of the insurance is deferred until your case concludes, and is only payable if you win. If your case is lost, you do not have to pay the premium.

What happens if my case is unsuccessful?

Novitas is repaid from the insurance policy so there is nothing for you to pay.

While your case is active

Do I have control over how the solicitor uses the money?

Yes. Your solicitor can only draw the money against disbursements related to your claim. You will be emailed each time an amount is drawn down and can contact your solicitor directly if you have any queries. 

How often can I make a drawdown from the loan?

The loan can be drawn down as many times as your solicitor requires, up to the limit of your loan. All drawdown requests are made by the solicitor.

What happens if I decide to not continue with the claim whilst on funding?

Your solicitor will notify Novitas and the insurer and a claim will be made on the policy. Depending on the reason for stopping the case you may be liable to repay what you have drawn down, for example, in the case of fraudulent activity on your behalf.

Can I change solicitor?

The loan is linked to your current solicitor, so if another solicitor takes on your case we would have to approve them before transferring the loan, otherwise you will be in breach of our agreement and the loan will have to be repaid immediately.

There is no charge for transferring the loan. If you repay the loan you can apply for a new facility with a new Novitas approved solicitor.

Can Novitas stop funding during the case?

Yes, there are circumstances which may mean we stop any further drawdowns from your loan, including: 

  • disclosure of subsequent material facts that adversely affect the case
  • your solicitor leaving your case 
  • your solicitor not meeting the undertakings they give to Novitas
  • any of your own behaviour that gives rise to concern about recovering the loan

What happens if my solicitor is suspended from practice by the Solicitors Regulation Authority during the term of the loan?

You can cancel your loan facility which will require immediate repayment or, with our written permission, transfer the loan facility to another solicitor.

 

Settlement

Does the loan repayment come from the proceeds of my settlement?

Repayment is made either from the proceeds of your claim, or from the insurance. You will instruct your solicitor to make the repayment from your settlement before they issue you the remaining balance.

Can I pay the loan back in instalments?

No, the loan needs to be settled in a single payment once your case has been settled.

Can I repay the loan early?

Yes. There are no penalties for repaying the loan early. We calculate interest daily so the shorter the time you have the loan, the less interest you will pay.

What happens if I don’t use all of the loan?

Any unused loan money is returned to Novitas and interest calculated on a pro-rata basis (i.e. applied only to the amount you have used).

Can Novitas ask for repayment at any time?

Repayment is at the end of your proceedings, but if you breach the loan agreement we may ask for repayment of the loan at any time. This can include, dis-instructing your solicitor without our agreement or failing to follow advice from your solicitor in any material way that impacts whether Novitas will be able to recover the monies loaned to you.

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