The Plevin ruling in 2014 was a landmark ruling for PPI claims, but it also reinforced existing laws around the use of hidden commission fees in loans.
However, the Plevin ruling can be applied to a wide variety of financial products and services.
The Plevin ruling in 2014 was a landmark ruling for PPI claims and there is some expectation that it can be applied to credit cards, loans, mortgages and other types of personal finance where you feel broker fees have been hidden.
Regardless of the type of financial product, you have chosen, if you have a broker who has arranged it for you and they are charged commission without you being told, you could make a claim under Plevin.
Any time you have used some form of credit broker or intermediary to arrange your financial product, their commission fees must have been set out clearly to you.
Read on to learn more.
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Whenever you take out a financial product or service, you can either go directly to the lender, or you can speak to a broker. Some products may insist on a broker, or certain lenders may only work with lenders. A broker’s job is to look at your financial circumstances and then recommend relevant products that you are likely to be accepted for and that are deemed to be fair and reasonable considering your situation.
A broker is then either paid via a set fee, commission, or a combination of both. The payment is usually made by the lender, rather than by yourself, although your finance agreement will be adjusted to cover the costs of any fees or commissions paid. Ultimately, you are liable, even if the payment is made by the lender.
That’s why, if it’s found that your agreement has been mis-sold due to an issue with the commission, it would be you that was refunded and not the lender.
The Plevin ruling was created due to a court case in 2014. The case was brought by Mrs Susan Plevin against Paragon Personal Finance and her credit broker of choice, LLP. It was related to a loan that Mrs Plevin had taken out in 2006, where she was also recommended Payment Protection Insurance.
Mrs Plevin took the PPI policy that she was told had a value of over £5,000. However, over time Mrs Plevin came to realise that she had not spent all of the money on the insurance policy. Instead, the vast majority (around 72%) was used just to pay commission to Paragon and LLP, with only £1,600 being paid to Norwich Union, the provider of the PPI plan.
Mrs Plevin argued that this was an unfair agreement and that if she had known just how much of her payment would have been used as commission, she would have rejected the policy outright due to it not representing good value. The courts found in her favour and she was repaid the excessive commission costs along with the interest that would’ve accrued.
Since the ruling, the Financial Conduct Authority set out guidelines around Plevin and where a commission was adjudged to be too high. This related specifically to PPI, but similar theory could be applied to other forms of financial product. If you feel that you were charged too high a commission fee for your loan, credit card or other agreement, you could raise a claim under Plevin and be due to a refund of some of the costs, plus the interest you would have earned.
It is most likely that any valid claims will be against financial products created before 2008. That’s because, around this time, multiple cases were brought against lenders related to undisclosed commissions. As a result, lenders and brokers were more careful about what they charged. You may have been overcharged on any financial product but, if you took out a finance agreement before 2008, you should be extra-eager to discover more.
Whenever you take out a mortgage, you will often use a broker to help you get the best deal, unless you go direct to your own bank. Mortgage brokers are absolute experts in the field of mortgage applications and will help you to find the best-fixed rate or variable deal depending on your property and finances.
Broker fees, when it comes to mortgages, are usually pretty clear-cut. You’ll get a breakdown of any fixed fees you have to pay, as well as any commissions that the mortgage lender is incorporating into your final loan amount.
It’s unlikely that you’ll be charged an unreasonably high level of commission on your mortgage, but you may be able to make a claim, particularly if your mortgage was taken out prior to 2008. If you cannot find any record in your mortgage agreement of the fees or commissions paid to your broker, it could be worth considering – hidden amounts may mean that you’ve been charged excessively and could be open to a Plevin claim.
Fewer people use brokers to find a credit card in person, but online brokers are commonplace. While many people will go direct to either their bank or a renowned credit card name, others may use comparison websites or similar to find the best deal.
Comparison websites are brokers. Their job is to evaluate your circumstances and show you a list of credit cards that you might be eligible for, and how much you’d have to pay. And while most of the larger comparison websites are reliable, trustworthy and will disclose all commission as part of your agreement, it is still worth checking.
Plus, prior to 2008, comparison websites weren’t really used and so you may have gone to a broker in person. If you did, they might have suggested you take out a credit card with a lender who was more favourable to them, and so paid them a higher commission. Check your credit card agreement. If the commission fees aren’t detailed, you could have a Plevin case.
Home shopping accounts and catalogue cards generally aren’t sold by brokers. However, there may be some circumstances where you were sold an agreement by someone at the store, and they were paid commission in order to sign you up.
It may be more tentative than a mortgage or credit card claim, but you might be able to make a Plevin claim if you can prove that the commission paid was unreasonable. As with a credit card or mortgage, or indeed any loan, you should revisit the terms of your agreement and check whether extra fees have been clearly identified.
Once you’ve established that you took out a financial product via a broker where you paid commission, you should check whether it was made clear just how much that commission would be.
Again, if your agreement was taken out before 2008, you are much more likely to not have that been given that vital information. The next steps are to raise a claim with your lender. Rather than doing this alone.
When seeking damages for undisclosed commissions, there are two options:-
What you tend to find is that even relatively “simple” compensation claims can become a little more difficult when you need to provide evidence. This is where the experience of using a claims management company can be very useful. They have been there, done it and are fully aware of the type of information required for a swift settlement of valid damages/compensation claims.
Yes. The traditional time period is three years from the date you signed the agreement or three years from the date that you were made aware of potential undisclosed commissions. It is worth noting that while you need to formally lodge a complaint within this three year period, you do not have to have completed your claim for damages/compensation.
As soon as you become aware of a potential undisclosed commission in any form of historic financial agreement, then you should contact a claims management company for further advice.
They know the information required, how this should be presented and the intricacies of the UK legal system. If they believe you have a minimum 60% chance of success, they will likely offer to take on your case.
If pursuing a claim by yourself, then it is simply your time and any additional legal advice. When it comes to claims compensation companies, they will likely offer a “no win no fee” arrangement.
This effectively indemnifies you from any costs incurred by the claims management company when pursuing your case for damages/compensation. However, they will also negotiate a “success fee” which is their reward for a successful prosecution.
A success fee is simply a share of any compensation awarded to the claimant. On average the figure tends to be around 25% of any compensation, but it will vary on a case-by-case basis.
We can only estimate, but there must be thousands of perfectly valid undisclosed commission compensation claims which have not been pursued. This may be because of a misunderstanding of the system, concerns about the cost of pursuing compensation or even confusion over the evidence required.
This is where claims management companies come into their own as they will have deep-seated experience in pursuing financial compensation claims.
Yes. This is where the “no win no fee” structure comes into its own. As the vast majority of cases today are pursued under this umbrella, this allows potentially negligent third parties to be held to account.
Not only does this often result in compensation for the claimant, but it also prompts brokers/lenders to change their procedures going forward. If these parties were not held to account, then they would likely continue on the same basis with clients continuing to suffer going forward.
Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for mis-sold financial products and they can do the same for you.
Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.
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