Are banks set to face a bigger PPI compensation bill?
Unless you have not seen any news or current affairs programme, read any newspaper or not been anywhere near the internet in the last decade, the mis-selling of PPI scandal cannot have escaped you.
And it is one of those scandals that refuses to slink off into the corner quietly. Just when you think it could be dying a death, something comes along to fan the dying flames. Except that the flames of the PPI scandal have never been dying – they have always been burning strong.
The latest twist in the story
The 2015 Supreme Court judgment in Plevin Vs Paragon Personal Finance could result in a new wave of PPI compensation claims, including a change in how customers are compensated.
Susan Plevin argued that if she had known how much compensation the broker was receiving for selling her PPI, she would have questioned the premiums she was being asked to pay. The court agreed, ruling that if a PPI seller failed to disclose to a customer the large amount of commission they would be receiving then according to the 1974 Consumer Credit Act, this would make the sale unfair.
It could open the flood gates for more PPI compensation claims as the Financial Conduct Authority has agreed that even in cases where the PPI itself was not mis-sold, if the seller failed to declare a large commission as a result of the sale, the customer would be entitled to compensation.
New rules needed?
The Financial Conduct Authority (FCA) is the City regulator and in a statement released shortly after the ruling, they said they were considering whether a new set of rules would be needed in light of the Plevin decision and commission-based complaints.
They said they would be engaging with relevant stakeholders and along with steps relating to possibly imposing a PPI deadline, the City is still awaiting their response, some months after the original ruling.
In the Plevin case, the Supreme Court did not define what a large commission was. But Susan Plevin felt that the 72% commission of the £5,780 premium she paid for PPI was excessive – and looking at the figures now, it seems ludicrous to think that this amount of commission was paid to her broker.
Not the first time
This is not the first time that the FCA has made a move to crack down on how banks and lenders have compensated customers in relation to PPI. They ordered banks to reopen 2.5 million cases and check the right amount of compensation was paid after it was found not all fees and costs had been reimbursed.
Do you have a claim for mis-sold PPI? If so, Payment Protection Scotland can help. Call now to find out more.