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Clients: Clinical negligence

About the loan

    Is the loan regulated?

    The loan is regulated under the Consumer Credit Act 1974.

    How does the loan work?

    This is a regulated loan between you and Novitas which you can use to cover the costs of your clinical negligence proceedings, such as medical or expert reports.

    The money is drawn down from your loan as it is needed, and paid directly to your solicitor to reimburse them for costs associated with your case.  

    An insurance policy is in place from the start to cover Novitas for the money you borrow in the event your case is not successful.

    What can the loan be used for?

    Your loan will cover costs such as court issue fees, medical reports and GP records.  

    How long is the loan for?

    There is no fixed loan term but your repayment must be repaid when your case concludes.

    Am I personally liable for the loan?

    This is a fully recourse loan, which means that you, the borrower, are always responsible for repaying the money borrowed. 

    How much will you lend and how is it paid?

    There is no minimum but there is a maximum, depending on the Insurer chosen by your solicitor. The loan is a pre-approved facility, which your solicitor can draw funds from to pay invoices.

    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 you use

    Is the loan with me or with my solicitor?

    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.

    How much does the loan cost?

    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, so the costs are kept to a minimum. 

    Recent legal precedent may mean a proportion of the interest is recoverable from the other side. However, this is not guaranteed and you should assume that the interest is to be repaid from your settlement.

    In addition, you will be charged for the non-recoverable element of the insurance policy. Your solicitor will provide the details on this.

    How is the interest calculated?

    Interest is fixed at 1.25% per month and calculated on a simple basis, i.e. there is no compounding of interest.

    We take the annual interest rate of 15% (1.25% per month), multiply by the amount of the facility you have drawn down and divide by the number of days that the money has been drawn down for. 

    For example, if you have drawn down £10,000 for 6 months, you will pay back interest on the £10,000 of £774. You will receive a statement at least once every 12 months, so you know exactly what you owe as your case progresses.

    Representative example:  

    • Total amount of credit: £100,000
    • Total charge for credit: £27,680, includes:
      •  £5,150 insurance
      •  £75 administration fee
      •  Interest £22,455 (full facility draw down month 1)
    • Rate of interest 15% per annum (fixed)
    • Duration 18 months
    • Total amount payable £127,680
    • Representative APR 18.5%

    Do I have to have insurance?

    Yes. Your loan must be covered by a Recourse Policy Schedule which will repay Novitas 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.

    Do I need to provide security for the loan?

    You will need you to sign a ‘Deed of Assignment’, which means Novitas is repaid from the proceeds of any settlement you receive before the remainder is passed to you.

    Is it in my solicitor’s interest for me to use a Novitas loan?

    Your solicitor is independent so receives no financial incentive from Novitas. Our loan service is a funding option available for you to consider, and only you can decide to go ahead.

    What happens if I agree to the loan but never proceed?

    Any unused loan money is returned to Novitas and interest calculated on a pro-rata basis, in other words, applied only to the amount you have used.

    Does every solicitor have access to the Novitas scheme?

    No. Our loan service is only available through approved firms. Check with your solicitor to see if they are approved; if they are not they can contact us about becoming an approved Novitas partner. 

    What happens if my solicitor is suspended from practice by SRA during term of loan?

    You can cancel your loan facility which will require immediate repayment or transfer the loan facility to another solicitor.

    Where can I find more information?

    Speak to your solicitor to find out more about Novitas loans. Please note that these FAQs are intended for information only and you should not rely on them solely to make your decision about whether to enter a loan agreement.