Since August 2017, lenders have been required to follow guidance from the Financial Conduct Authority (FCA) surrounding a court ruling known as Plevin when dealing with claims for PPI – regardless of whether the policy was deemed to have been mis-sold or not. The guidance set out that lenders should also consider if a commission had been paid out of the PPI premiums and whether the commission amount was fair.
As such, commissions paid on a PPI policy which comprised of more than 50% of the customer’s PPI premiums are deemed unfair and anything over this ‘tipping point’ should be paid back by the lender.
Following the Plevin ruling, customers who had their original mis-selling claims defended are able to go back to the lender and have their complaint revisited, on Plevin grounds.
The BBC reported that, so far: “Around 1.2 million complaints have proved successful under this, the so-called Plevin rule, out of a total of 13 million PPI payouts.”
In June 2018, however, Christopher and Joanne Doran took a case to court against Paragon Personal Finance, arguing that they were not informed of the amount of the commission they had paid on their policy – a huge 76% of the PPI premium.
Judge Pearson at Manchester county court ruled that the Dorans would not have taken out the PPI policy had they been made aware of the level of commission applied. He ordered Paragon Personal Finance to pay the couple the full PPI premium and accrued interest, not just the 26% they would have been paid under FCA guidance.
“They are the first people to have all of their commission payments refunded for a legitimately sold policy,” the BBC confirmed.
According to the Financial Times: “Lawyers in the Doran case said the FCA guidance is ‘fundamentally flawed’. Elis Gomer, commercial barrister at St John’s Buildings in Manchester, has calculated that if the ruling were enforced consistently customers could get an extra £18bn.
“This will send shockwaves through the banks,” he told the Financial Times. Banks would continue to offer the lower FCA approved figure but customers could challenge it, he said.”
Lloyds Bank has so far paid out £18.8bn for mis-sold PPI (including Administrative costs), while Barclays has paid more than £9bn (including Administrative costs) and RBS nearly £5bn (including Administrative costs).
Paragon Bank, which owns Paragon Personal Finance, is said to be considering its legal position since it has said the decision is at odds with other cases heard recently.
The Guardian suggests that: “…the ruling is likely to increase pressure on the FCA to remove the August 2019 time-bar on future claims.”
Anyone wanting to make similar claims would have to go to court and so, TCG recommend that you engage a firm of solicitors to further consider any previously defended PPI claim. We can help you do this by introducing you to solicitors who are experts in this area of the law. Call us on 0203 651 4545 and a member of the team will be able to help.