PPI is a term most are familiar with, from the catchy-TV ads once played on loop, to the stream of leaflets posted through letterboxes. Although the original deadline for PPI mis-selling has passed, another scandal has been uncovered that has the potential to give back millions more for deserving claimants across the UK. The 2014 court case of Plevin v. Paragon Finance put the relationship between the borrower and banks back in the spotlight.
Payment Protection Insurance
Payment Protection Insurance was sold alongside loans, credit cards, mortgages, and other types of credit agreements. Where a policy holder couldn’t work due to accident, injury, or illness, it was designed to give cover and peace of mind on their repayments.
The FCA found that many as 64 million policies were sold in the UK between the 1970’s and 2010’s, and that most of them had been mis-sold. More than £33bn has been paid back to deserving customers following the deadline to claim for PPI mis-selling, which was the 29th of August 2019.
The Plevin Scandal
Amid the PPI mis-selling scandal came about another monumental case that meant more money could be owed to millions across the UK.
What happened in the Plevin case?
Mrs Susan Plevin, a retired lecturer aged fifty-nine, responded to a leaflet through her door from a credit broker who offered to refinance her existing debts. She happily phoned up the company with an interest in using the loan to pay off her debts and fund some home improvements. They advised that she should borrow £34,000 from lender Paragon Personal Finance and take out a PPI cover on the loan.
This PPI premium amounted to £5,780 and was added to the amount of the loan, totalling £39,780. Mrs Plevin knowingly accepted the PPI cover and signed up for this loan.
It was found during the trial that, of Mrs Plevin’s policy payments, 71.8% was taken as commission, split between the broker and lender. This meant that of the £5,780 that Mrs Plevin agreed to sign up for, just over £4000 of that was going straight into the pockets of the broker and lender – a monumental amount to be taking as commission instead of covering her re-payment insurance.
How is it different from PPI mis-selling?
The Plevin case paved the way for a new branch of PPI claims, not by the nature of mis-selling, but for the commission taken.
The Supreme Court determined that the amount of commission taken from Mrs Plevin’s policy was an unfair amount. The fact that Mrs Plevin willingly signed up for the policy was not an issue in this case. The issue was that, if she had known about the commission amount, she would have certainly questioned taking out the policy in the first place – as anybody would!
It was therefore found by the court that, taking a high percentage of commission from Mrs Plevin – and keeping her in the dark about the amount – was the cause of the unfair relationship.
What does this mean going forward?
The landmark ruling of Plevin now means millions are eligible to claim back commission earned, unfairly and secretly, by the banks.
If your original mis-selling claim was successful, unfortunately you cannot claim under Plevin as there will be no remaining loss owed to you.
You can make a Plevin claim even if your original mis-selling case was rejected, and you do not need to know how much commission you paid in your policy.
The banks may have thought that the dust had settled on PPI claims after the original mis-selling scandal, however the unfair commission ruling in the Plevin case has uncovered a new opportunity for customers across the UK to claim back more money that the banks have unfairly taken.