Payment Protection Insurance (PPI) is famed for the mis-selling scandal that ran for years. Thousands of customers were able to claim that they were mis-sold their PPI policy and get a refund of the costs they incurred alongside interest. But many customers were also rejected.
The Plevin ruling in 2014 has given many customers a chance to claim compensation even if they were previously rejected for a mis-sold PPI claim. If your PPI provider paid undisclosed fees to your broker, it may have been mis-sold.
If you made a claim for PPI being mis-sold and you were rejected, the Plevin ruling around commission fees may have given you a second chance to make a claim.
However, with a landmark case in 2014 that went through the courts, and the subsequent guidance changes from the FCA, thousands of those rejected customers could have made a new claim.
Read on to find out more.
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PPI policies were regularly sold as attachments to loans and other personal finance products in the early 2000s. But claims started to ramp up that they weren’t being sold correctly. In 2011 the scandal exploded as Lloyds Banking Group admitted it was setting aside over £3.2billion in advance of a wave of complaints. The complaints ranged from PPI being overly expensive, unnecessary, ineffective and unfair (with genuine claims not getting a large enough payout) and sometimes just sold to a customer without their full knowledge or consent.
What followed were many thousands of customers making their claims against mortgages, loans, credit cards and more with payouts ranging from small two-digit sums to huge funds in the thousands. The average payout ended up being around £2,000.
Suddenly, PPI claim firms started appearing everywhere. They claimed that they were able to do all the hard work for you, and uncover where you might have had PPI in the past. Ultimately, however, these firms weren’t needed. There wasn’t really any hard work involved, and most customers realized, with advice from major financial bodies, that they could make their claims themselves without losing huge percentages of their payout.
Unfortunately, while many thousands of customers were receiving their payouts, just as many were also being rejected by the lenders or financial institutions.
There were many reasons why PPI claims were rejected but most common was that there was insufficient evidence that PPI was mis-sold. Often customers were struggling to convince banks or lenders that the policy they had signed, which clearly stated PPI would be included, was unclear to them or had misled them.
This led to many people who felt hard done by being told that they couldn’t reclaim their money even though they felt they had been charged unfairly.
A landmark court case in 2014 changed things for many people who had previously been told their claims were rejected. The court case was brought by Mrs Susan Plevin against Paragon Personal Finance and her broker LLIP. It was related not to the PPI policy itself, which she conceded she had knowingly signed up for. Instead, it was an argument against the commission she had been charged.
When Mrs Plevin took out her loan in 2006, she used the broker LLP who put her in touch with Paragon Personal Finance. The loan was around £34,000. Paragon Personal Finance also advised Mrs Plevin to take out a PPI policy in case anything happened to her that prevented her being able to keep up with payments. The total cost of the policy was just under £6,000.
Over time, Mrs Plevin came to realise that it was never disclosed just how much of that fund had been used to pay commission, so she investigated and then took Paragon and LLP to court. It was uncovered that almost 72% of the fund was purely for commission, with just over £1,600 going to Norwich Union, the insurer.
Mrs Plevin argued that this meant her PPI policy had been mis-sold as if she had known about the huge commission fees involved she would not have viewed it as good value for money and would have rejected the PPI policy. The courts found in Mrs Plevin’s favour and she was reimbursed for her costs, plus interest.
The court case was brought in 2014, but it wasn’t until 2017 that the Financial Conduct Authority then established its guidance on Plevin and how it impacted PPI claims. The FCA set out that thousands of customers who had previously been rejected could now make a claim under Plevin and that they would be eligible for a refund if found that their commission fees had not been properly disclosed.
The agreement made was that any commission that was higher than 50% of the PPI amount paid at the point of sale was excessive, and the customers who complained were to receive a reimbursement of that figure over 50%, alongside missed interest.
In 2019, the FCA further updated their guidance to clarify that lenders and brokers had to write to a huge number of people who had previously been rejected, informing them of Plevin and how they may have a case to bring. This was estimated to be between 70,000 and 150,000 customers. It was also clarified that ongoing commission payments as part of a PPI finance plan, and not just initial payments at the point of sale, could be considered under Plevin.
This opened the door to many people who might have been told they did not have a PPI case now realising they may be able to reclaim some of their lost money. However, the FCA did acknowledge at the time of the update that many customers were now disengaged with the PPI campaign, and would not properly read any letter and subsequently would miss out.
They made it clear that lenders and brokers would not be at fault for customers who missed their opportunity because of this.
The major issue with Plevin and any related claims is that the Financial Conduct Authority tied Plevin complaints to the same deadline as all other claims for mis-sold PPI. This deadline, the 29th August 2019, has now passed.
What this means is that many people who could have claimed under Plevin now will not be able to. Unless you can prove exceptional circumstances which stopped you from lodging your complaint by the deadline, then you will not be able to submit a late claim.
Exceptional circumstances covers bereavement and serious illness before the deadline date. It specifically does not cover ignorance of the deadline date, with the FCA advising lenders and brokers than anyone claiming they didn’t know about a deadline could be dismissed out of hand.
Which leads to the question of, what now? If you are someone who did have a PPI policy that was sold before August 2017 and you missed the deadline, you can still get in touch with our mis-sold loan and PPI experts. We’ll review your situation and be able to let you know whether there are any circumstances were you could be eligible to make a claim.
Also, the deadline did only apply to PPI policies sold before 29th August 2017. While it is extremely unlikely for a lender or broker to have mis-sold you PPI after this date, considering their awareness of the laws around PPI, it could still be worth examining your agreement and ensuring it is fully compliant.
The action of pursuing compensation for the mis-sold commission is different from any action you would take if you found the advice given at the time to be incorrect. While the three-year window of opportunity would have expired for PPI policies sold before the 29 August 2017 this window could be reset for misadvice claims if you could prove you only recently became aware of this. This may be worth discussing with a claims management company with experience in this area.
This particular situation is fairly complex in that strictly speaking the timescale has come to an end. There may well be exceptional circumstances, for example, bereavement/serious illness, but this would need to be argued either with the regulator or through the courts.
This is an area in which claims management companies have significant experience, the often unpredictable UK legal system, so, therefore, it may be sensible to approach a claims management company with details of your exceptional circumstances.
The traditional three-year timescale can be extended in extenuating circumstances. However, the situation with PPI, for example, is a little different because the regulator announced a cut-off date of 19 August 2019 for valid claims.
It may well be that you were sold a PPI policy after 29 August 2017, unlikely but possible, on which you could still pursue a claim under the three-year window of opportunity. The three-year timescale is a standard period for not only financial compensation but also personal injury claims.
If a claims management company believed you had a minimum 60% chance of success, they would likely agree to take on your claim. The majority would offer a “no win no fee” arrangement which effectively indemnifies you from any costs incurred by the claims management company when pursuing your case.
In return, they would request a “success fee” which would be a percentage of any compensation awarded.
On average a “success fee” would be around 25% of any compensation awarded although it will vary from case to case. This is the reason why claims management companies set the potential success bar so high, at 60%, to give them a more than equal chance of success.
It is unclear why so many people appear to have left their PPI claim so late and effectively time-barred themselves from making a claim. As the regulator had already instructed PPI insurance companies to contact all of their clients directly, there is no real excuse.
As we touched on above, there may be extenuating circumstances with some cases, but these scenarios are likely to be few and far between. This is a perfect example of why you should consider employing the services of a claims management company when pursuing any type of compensation.
They know the system, they appreciate the timescales, and they know the type of evidence required to cast your claim in its most favourable light.
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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