PPI back in the headlinesJul 10, 2018
The PPI scandal is once again back in the headlines this week as a new court ruling means billions more may need to be added to the redress pot.
Banks have been relying on the PPI deadline as a way to draw a line under what has been the biggest compensation exercise in UK financial history. However, this new ruling threatens further large pay-outs for the financial institutions so desperate to say “bye bye to PPI”.
The case, held at Manchester county court, involves Christopher and Joanne Doran against Paragon Personal Finance, and revolves around the issue of the amount of commission paid.
Mr and Mrs Doran took out a £30,000 loan with Paragon Personal Finance in 2004. A PPI policy was sold alongside the loan, and the pair signed the agreement for the sum of £40,500.
However, of the £10,500 that was believed to be for a PPI policy, £7,985.46 was actually kept as commission for Paragon Personal Finance.
The banks have been abiding by the Plevin ruling since October 2017. This means that if more than 50% of a customer’s PPI’s payments were commission, and this was not explained to them at the time, they could claim back payments above that threshold, plus interest.
However in the ruling on the Doran case, the judge said the entire commission should be repaid plus interest – meaning they have been awarded a total of in compensation.
Speaking about the case earlier this week, Chief executive of the Alliance of Claims Companies, Simon Evans, :
“This ruling is hugely significant and sets a new precedent.
I’ve seen a figure of £18bn as the extra amount that could be paid out as a result of this ruling, but that might be too conservative. It could be as high as £30bn.”
In total around £50billion was paid by consumers for PPI policies, and once interest is added, the total figure is £80billion - but so far, the banks have repaid only £30billion.
These figures are astounding, and support our argument - with so many people still owed compensation, how can the FCA justify their decision?
Admittedly the scandal must have taken up a lot of time and resource for those working at the FCA, and one could easily see why the regulator would be as keen as the banks to say “Hasta La Vista” to PPI.
As this latest case once again highlights the shocking amounts being charged for commission on this toxic product, we must once again question whether the deadline is in the best interest of the consumer?