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Clients: Clinical negligence

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 (costs) associated with your clinical negligence 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 used 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.

    This is a fully recourse loan, which means that you, the borrower, are always responsible for repaying the money borrowed; however, 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: £27,680, includes:

    • £5,150 insurance
    • £75 administration fee
    • £22,455 loan interest (assumes full loan amount draw down on day 1) 

    Rate of interest 15% per annum (fixed)

    Duration 18 months

    Total Amount Payable £127,680
    Representative APR 18.5%

    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.

    How much will you lend?

    There is no minimum but there is a maximum, depending on the Insurer chosen by your solicitor.

    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.

    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 and cannot recommend us to you. Our loan service is a funding option available for you to consider, and only you can decide to proceed with a Novitas loan.

    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 the SRA during the term of the loan?

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