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20 Aug 20

PPI back in the spotlight

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Mis-sold PPI has been widely reported in the media, with a particular focus on the issue in Summer 2019, prior to the August deadline for making complaints to lenders.

The fact that consumers who had PPI are still able to make claims has been much less publicised. Last weekend, however, The Times, among other news outlets, has now reported on a possible “second wave of PPI payouts”i and how lenders are trying to avoid this.

Compensation for secret commissions

Credit customers who had PPI, whether it was mis-sold or not, could be entitled to compensation due to the insurance being sold unfairly. Lenders often took a huge proportion of customers’ PPI premiums as commission without informing them. Following the Plevin vs Paragon caseii, in 2017 the financial Regulator, the Financial Conduct Authority (FCA), instructed lenders to refund PPI customers this hidden commission – but only the amount that was over 50% of the premium, this is known as a ‘tipping point offer’.

It was common for lenders to take between 40% and 80% of PPI premiums as commissioniii, The Times reports that in some cases this was as high as 95%.

Legal route

At present the only way to make a compensation claim for the proportion of commission above 50% (a Plevin PPI claim) is through a litigated claims process. Plevin PPI is an evolving area of law and many cases are resolved before a court case. The Times reports that lenders are “desperate to shut down claims using expensive lawyers — costing almost £1,000 an hour — to argue their position.” These claims fall under the low value Consumer Credit Act and are allocated to the Small Claims Track. In several cases where judgments have gone against lenders they have appealed.

In the case of Laretive vs The Funding Corporation, the amount of commission taken from premiums was 79%, the judge commented; “There is clear reason, I would say, why the defendant did not disclose that to the claimant, because a claimant with knowledge and understanding that almost 80 pence in the pound of what was being paid was actually going in commission may well be quite alarmed by that.”

The Times’ article (see link below) also lists some case studies, some of which the lenders have taken to appeal.

Who is eligible to make a claim?

If you had PPI and have not previously made a complaint regarding mis-sale, if you have had a mis-sale claim defended, or if you have received only a ‘tipping point offer’ (a refund for the amount over 50% of hidden commission charged) you can make a Plevin PPI claim.

i) https://www.thetimes.co.uk/article/banks-face-second-wave-of-ppi-payouts-and-they-are-desperate-to-stop-it-h0qxt0nr5

ii) https://www.fca.org.uk/news/press-releases/fca-finalise-plans-place-deadline-ppi-complaints

iii) https://www.gov.uk/cma-cases/payment-protection-insurance-ppi-market-investigation-cc