There is speculation that there might soon be another massive round of PPI payouts – this time based on the commission consumers were paying on the policies sold to them.
The UK finance industry has already paid out £38.3 billion in PPI compensation, but now they appear to be facing another wave of claims which could cost them even more billions.
Banks are still paying out millions of pounds for cases brought before the claims deadline on August 29th last year. That deadline was supposed to draw a line under the whole PPI scandal, but it did not prevent consumers sold policies with massive commission attached making claims through the courts.
The Financial Conduct Authority (FCA) ruled that a failure to disclose a commission of 50% or more gave rise to an unfair relationship and should be refunded to the client. This was based on a claim made by widowed college lecturer Susan Plevin who was sold a policy by Paragon Personal Finance for which they received 71.8% of the cost in commission.
This was not revealed at the point of sale and the Supreme Court decided the sale had been ‘unfair’ and she was refunded £3,000.
But since then there have been a number of court actions in which claimants have been awarded all of the money they paid in commission with a number of other cases being settled out of court.
Ali Hussain, chief money reporter of The Times, said that a whole series of claims regarding the level of commission charged on policies have been upheld in court cases all over the country.
The court rulings found the policies were ‘unfair’. He said: “It means anyone who was denied a payment, received only partial refunds or has never claimed can demand all their money back — regardless of whether the products were appropriate for them or not.”
He highlighted a High Court case in March this year where Canada Square Operations – part of the American giant Citibank – appealed the decision to award one of their customers all of her PPI payments, totalling £7,954, after she discovered 95.24% of her policy cost was commission.
In another case Ms Karen Smith of Launceston, Cornwall making a claim for £1,500 found herself facing a top barrister hired by Royal Bank Of Scotland (RBS) to fight the claim. RBS lost the case but is now appealing.
The lady did not complain that the policy was not suitable for her. Her complaint was solely about the amount of money she had paid in commission.
District Judge Jonathan Stone said: “RBS provided no information to Mrs Smith that would enable her to discern that it would be receiving commission.
“She was kept in total ignorance, but the bank knew it would be taking commission and it knew the extent of that commission. It follows that the inequality of knowledge was total and as a result of course the relationship was unfair.”
He pointed out it was unusual for a highly paid QC to attend a minor court matter in rural Cornwall, adding: “I suspect that it is this limitation point that causes the bank sufficient concern to justify the instruction of Queen’s Counsel to attend a small claim in Bodmin where the sum in issue is approximately £1,500.”
Martin Richardson, director of legal services at Moneyplus Legal, said: “This new wave of claims is worth billions of pounds, which is why the banks are seemingly doing everything in their power to try to stop them.”
It is difficult to know how many of the estimated 64 million PPI policies sold may be eligible for a claim over excessive commission, but even consumers who were happy that the policy met their needs can still claim if they were unaware of the amount of commission they were paying.
We can help
Gladstone Brookes has been proactively calling our existing clients that we believe could benefit from taking the issue to court and have referred 7,600 people to our partner solicitors Muldoon Britton who have a 99.76% success rate on cases with PPI taken to court between January 2019 and July 2020, with an average refund obtained of £2,700.
If you feel we can help you recover money you could still rightfully be owed please call 0333 448029 to start the process.”