BBA - v FSA - PPI Judicial Review

[HSBCrusher]

After 5 years of battle and looking at how the FOS has operated up to now... I'm not a fan.

 

this is my personal view. Everyone has to pick the route they think is best for them... I think court will be quicker.

[gettingsorted]

Sorry to jump in - we were sold PPI for our windows loan (First National) and the single premium was added to the loan. The loan was negotitated by the window firm as was the PPI. The PPI was quite clearly mis-sold (won;t go into it atm) we wrote the GE Cap to claim and received a letter referring us to the window company but this company went into receivership and according to Co House has been dissolved. I would therefore appreciate any suggestions where I go from here.

Thanks

[caro]

Sorry to jump in - we were sold PPI for our windows loan (First National) and the single premium was added to the loan. The loan was negotitated by the window firm as was the PPI. The PPI was quite clearly mis-sold (won;t go into it atm) we wrote the GE Cap to claim and received a letter referring us to the window company but this company went into receivership and according to Co House has been dissolved. I would therefore appreciate any suggestions where I go from here.

Thanks

 

Well if they've had your money when you shouldn't have been sold the PPI, I would suggest that there's an argument that they should pay it back to you. Surely they must have some responsibility for ensuring that their policies are not mis-sold and that they do not take money from missold policies.

 

You could always take them to court to see what a judge thinks. If the claim is for under £5k the risks are relatively small.

 

I would suggest you look into this and start a thread about it.

[beachcomber60]

Sorry to jump in - we were sold PPI for our windows loan (First National) and the single premium was added to the loan. The loan was negotitated by the window firm as was the PPI. The PPI was quite clearly mis-sold (won;t go into it atm) we wrote the GE Cap to claim and received a letter referring us to the window company but this company went into receivership and according to Co House has been dissolved. I would therefore appreciate any suggestions where I go from here.

Thanks

 

I have first hand experience of this very subject, good old FN/GE runround, did exactly the same to me over a loan for windows. DCA took us to court over this loan even tho' a ppi complaint was lodged with the FOS. Not going to go into too much detail as this may well end up in further court action against GE (reason as stated on my thread), the DJ found that the ppi was mis sold for various reasons & that the window salesman was driven by (secret) commissions paid by FN/GE to sell the ppi 'product' . As Caro advised start a thread on the subject.

[johnnymitch]

There's a lot of to-ing and fro-ing on this .... but basically i would agree that FOS is the best route for this sort of claim, not the courts , for the reasons stated by caro .... (and contador) ...

 

A friend of mine was mis-sold a PPI (because he was self-employed) for a mortgage .. the PPI was negotiated through a Mortgage lender ... who is no longer in business ..... and FOS decreed that the bank who dealt with this (I think it was Santander) were responsible ... he got his money back recently ....

 

I'd say it's worth a try with FOS before going the court route ... which may hold more pitfalls in law ...

[slick132]

If you go through the FOS, I wonder where they'd stand on the issue of claiming compound interest in restitution.

 

This is surely what you would do if seeking a PPI refund through the court, using the same compound interest spready as for CCard penalty charges.

 

Are the FOS really likely to suggest the bank pays compound interest at a significantly higher rate than Stat'y Int't at 8%.

 

From what I've seen, the FOS are quite prepared to let the banks get away with lower refunds, even leaving the banks to decide on the final settlement figures.

 

8-)

[caro]

There's a lot of to-ing and fro-ing on this .... but basically i would agree that FOS is the best route for this sort of claim, not the courts , for the reasons stated by caro .... (and contador) ...

 

A friend of mine was mis-sold a PPI (because he was self-employed) for a mortgage .. the PPI was negotiated through a Mortgage lender ... who is no longer in business ..... and FOS decreed that the bank who dealt with this (I think it was Santander) were responsible ... he got his money back recently ....

 

I'd say it's worth a try with FOS before going the court route ... which may hold more pitfalls in law ...

 

Sorry Johnny but I think you must have misread something. I don't agree that FOS is the best route, although of course if you don't get a satisfactory outcome with FOS there is still the option to go to court.

[gettingsorted]

Thank you all for your comments - I will ring the helpline and start a new thread if need be !

[jj69]

There's a lot of to-ing and fro-ing on this .... but basically i would agree that FOS is the best route for this sort of claim, not the courts , for the reasons stated by caro .... (and contador) ...

 

A friend of mine was mis-sold a PPI (because he was self-employed) for a mortgage .. the PPI was negotiated through a Mortgage lender ... who is no longer in business ..... and FOS decreed that the bank who dealt with this (I think it was Santander) were responsible ... he got his money back recently ....

 

I'd say it's worth a try with FOS before going the court route ... which may hold more pitfalls in law ...

 

I agree to this not everybody is a fan of FOS but I have found in all my claims they have come up trumps.To add to the broker/PPI posts, I have a claim going through FOS who are going after Lloyds of London as underwriters of First Plus PPi.I had a secured loan with First Plus with PPI in 2002 which as I found out was provided via Freedom finance who subsequently went through a company called Karakus who were based out in Gilbraltar (theres lot on the forums about first plus/freedom/Karakus) basically Lloyds are awaiting outcome from FOS investigation who have numerous complaints on the conduct of of these three companies when setting up the PPI.Lloyds have admitted being the underwriters so have not refused to repay the PPI they are awaiting the outcome of the FOS who update me regulary on the current findings.Despite the date issue and the fact PPI was setup via 3-4 companies are am confident I will get all or some of the PPI refunded.

[bustthematrix]

No, you don't want to take anyone to court for PPI. You should complain and escalate it to the FOS should you need to.

 

The lender is indeed responsible for their products bur they aren't responsible for mis-selling it where they didn't sell it.

 

Most IFAs operate within 'networks' and I think I'm right in saying that complaints about individual IFAs are the responsibility of the network. Failing that then approach the FSCS http://www.fscs.org.uk/

 

What the FSA are saying that as far as the consumer is concerned the complaint should be dealt with by the broker and if the broker feels that the lender bears some liability then the broker may have have recourse in the courts with the lender, That process does not involve the consumer and is separate to the broker's liability to the consumer.

Contador, may I ask what you would do in this situation? i.e. where the 'seller' was an IFA who has since gone out of business. Thanks.

[caro]

Don't forget though Buster, that if you use the FSCS and the claim is over £2k, you won't get all of your money back.

[ukaviator]

I have succesfully had PPI returned to me with 8% interest from GE Money who took over First National. I went back to 1996 using section 32 of the Limitation Act 1980. The window company do the leg work for the loan company lending the money for your doors and windows, however the loan company does the search on your credit file and raises the paperwork, which includes adding in PPI.

 

The main participants in the product development, distribution and administration of PPI are insurers/underwriters, credit providers or lenders, intermediaries, eg brokers, independent financial advisers. The insurers or underwriters of PPI products take on the risk3 of a customer’s inability to meet financial obligations, arising from a loan or other credit agreements because of unexpected events such as unemployment, accident, sickness or death. Intermediaries can distribute both credit products and PPI, or PPI alone. However, they neither underwrite the PPI products nor finance the credit or loan. Intermediaries make available to customers credit products or loans and PPI of one or more lenders and/or underwriters. These products can be distributed under the brand name of the lender or of the underwriter. In this case First National lent the money added PPI, but that was probably underwritten by another company behind the scenes who authorise First National to collect the money on their behalf. The more you look into PPI selling by the banks and insurance companies, you can see why the whole industry is riddled with con artists making vast somes of money. Underwriters have to put in tenders before being selected to provide PPI, many contracts have provisions regulating the transfer of the PPI policies to the new underwriter when the contract expires who may increase your PPI payments which has been seen with the credit card companies in the past. The PPI claim is against the loan company who added it to your loan.

 

 

[Fred_Funk]

If you go through the FOS, I wonder where they'd stand on the issue of claiming compound interest in restitution.

 

This is surely what you would do if seeking a PPI refund through the court, using the same compound interest spready as for CCard penalty charges.

 

Are the FOS really likely to suggest the bank pays compound interest at a significantly higher rate than Stat'y Int't at 8%.

 

From what I've seen, the FOS are quite prepared to let the banks get away with lower refunds, even leaving the banks to decide on the final settlement figures.

 

8-)

 

As far as I can see, the FOS doesn't make any provision for providing compound interest in restitution. That being the case, if it was a simple case of choosing between the FOS and the court route, most people - myself included - would, understandably, opt for the later.

 

However, assuming Contador is correct - and I have no reason to think otherwise - it appears the choice isn't quite as simple as that. Take your claim to the FOS and, while you may not benefit from compound interest in restitution, the FSA's principles come into play and there is every likelihood your claim for mis-selling will be upheld.

 

Take the court route and, assuming I'm understanding Contador correctly, the FSA's principles do not come into play. Rather, it's a case of using the Insurance Conduct of Business Regulations to demonstrate your PPI was mis-sold which, it seems, can prove rather more difficult.

 

Moreover, it's my understanding that even if a court upholds a claim that PPI has been mis-sold, it cannot be taken for granted that the judge will agree to award compound interest in restitution.

 

The point, it seems to me, is this: if you're intent on getting compound interest in restitution then court may be your only option but if you proceed in this direction on the basis of the FSA's principles - which aren't actionable in court - the likelihood is that you won't end up with more than you would have done had you gone to the FOS but you might well end up with nothing at all.

[caro]

Can someone give me the definition of "judicial" please.

[Fred_Funk]

Can someone give me the definition of "judicial" please.

 

I understand what you're intimating but, as I understand it, a Judicial Review simply looks at the legality of an action undertaken by a government department or local authority.

 

In this instance, the Judicial Review upheld the approach the FSA was taking to the sale of PPI.

 

http://www.hmcourts-service.gov.uk/cms/1220.htm

 

Of course, it would be helpful it the principles observed by the FSA and FOS when reviewing the sale of PPI were enshrined in law but, as I understand it, much as we might like 'em to be, the fact remains they're not.

Edited May 15, 2011 by Fred_Funk

[MARTIN3030]

"However, assuming Contador is correct - and I have no reason to think otherwise"

 

Hmn-no reason ...so explain please why no reason ?

[MadKit]

Thank you for the links, on reading through I found these which I think are interesting:

 

Two provisions make it clear that (1) a firm should not consider that a successful claim on a PPI policy is in itself sufficient evidence that the complainant had a need for the policy or would have bought it regardless (DISP App 3.3.7G) and (2) that a complaint should not be rejected solely because the complainant had held a PPI policy before (DISP App 3.3.13G).

 

Although I never made a claim on any PPI policies, its nice to see that even if you did this will not preclude you from making a complaint.

 

Regarding intermediaries:

 

"Distributors are responsible for maintaining a compliant sales process, and therefore should be responsible for redress, where a failing arose from the manner in which the product was sold. If brokers feel that undue pressure was placed upon them by lenders or insurers, they may separately have recourse to the court if they so choose."

 

Still unclear to me how to find an IFA who is no longer an IFA and address the PPI issues. I've sent another letter to the lender/insurer company so will see what they come back with but thanks to ukaviator who I think has made it a bit clearer for me.

 

And one more point, if the court "disagreed" then surely the court route is open to Claimants?

 

The court, however, disagreed. Whether or not actionable, the Principles were one of a number of things firms (and the fos) should take into account when considering a mis-selling complaint.

 

MadKit

Edited May 16, 2011 by MadKit

[MadKit]

I did check out all the info on intermediaries. My problem is that I know the IFA went to work for a "wealth" firm, go figure! I don't know what he's doing now as its been about 6 years since then, however the lender/insurer is still quoting his old company name and address which is no longer valid. The PPI was sold through the intermediary (LTD company) rather than an actual company and is in the same name as the lender and as I said, LTD company is defunct.

 

I didn't see a date on ukaviator's post so am not sure when the claim was made but I thought this was recent?

 

MadKit

[Fred_Funk]

"However, assuming Contador is correct - and I have no reason to think otherwise"

 

Hmn-no reason ...so explain please why no reason ?

 

I'm not sure why one or two of the site helpers appear to have it in for myself and Contador. For my part, all I'm trying to do is establish the best grounds on which to proceed with my claim and, in that respect, have found his posts - which, more often that not, are accompanied by supporting links - especially helpful. Believe you me, I wish there was a bona fide case for applying the FSA's principles in court and, at the same time, asking for compound interest in restitution.

 

To that end, if you can point me in the direction of one, I'd be most incredibly grateful.

 

Regrettably, no-one has yet managed to do so and, that being the case, have little option but to take the view what Contador has posted - and I've pasted, below - is correct.

 

''The court held that although the Principles are NON-ACTIONABLE they are still relevant for the Financial Ombudsman in deciding what is fair and reasonable in all the circumstances.''

 

http://www.mablaw.com/2011/05/ppi-decision/

[MadKit]

I found this on (http://www.allenovery.com) as well:

 

On the one hand, it is now clear that a firm can lawfully be held (in some circumstances by its customers as well as the FSA) to 'augmented' standards deriving from the Principles which go beyond the requirements of specific regulatory rules. On the other hand, the judgment gives little or no comfort to firms seeking to understand - at the time they are seeking to comply with them - exactly what standards they are required to achieve. Different but conflicting views may legitimately be taken of such matters. If liability - not only to the FSA but also to individual customers - may lawfully flow from breaches of the Principles, as the judge plainly found it could...

 

Surely this means it works for us as court claimants as well? And as soon as someone has won in court citing the judicial review and the above principles, then we will have a precedent. (Site people please correct me if I am wrong)

 

As far as claiming compound interest is concerned:

 

In a landmark judgment in Sempra Metals Ltd v Commissioners of Inland Revenue and another (2007) HL 34 given on 18 July 2007 the House of Lords has found that Sempra Metals Ltd (Sempra) is entitled to claim compound interest...

 

MadKit

Edited May 16, 2011 by MadKit

[caro]

Important County Court decision could impact on lenders and brokers

 

Tuesday 20th July 2010

 

 

A recent case described as 'important' by legal professionals could create problems for mortgage lenders and brokers in dealing with PPI complaints.

In a recent County Court case in Manchester, borrowers pursued a claim against the subprime lender Nemo Personal Finance, under Section 140A of the Consumer Credit Act.

Section 140A of the Consumer Credit Act empowers the Court to make such orders as it determines appropriate where there is an unfair relationship between creditor and debtor.

In this case, the borrowers sought redress entirely from the lender, as the mortgage broker involved, Loan Options, has gone into administration.

One of the borrowers claimed that the mortgage broker “forced” an uncompetitive PPI policy upon her, and made her feel that the taking of PPI was a condition of receiving the loan.

The borrowers also sought declaration that the lender had procured a breach by the broker of its fiduciary duty by paying undisclosed commission.

Although the case was decided at County Court level and therefore is not binding on other courts, it has been said that there is “little doubt” that it will be produced by debtors, PPI claimants and claims management companies in support of claims.

In this particular case the PPI premium was £15,468.75, the premium being funded from a loan repayable over a 20 year term.

The total cost of the PPI with interest was £32,436, with the loan providing life cover for both of the debtors and sickness and unemployment benefit for the first named debtor. The cover was limited for a period of 5 years only and provided cover for 12 monthly payments, equating to £8,000 in any one claim. A 50% refund of the premium was available at the end of the policy if no claim was made under it.

In respect of the loan advance, the brokers received a commission of £9,982.50 and a brokers’ fee of £2,000. Half of the PPI premium was received as commission by lender and broker.

The Judge decided on the facts that the policy was unfair to the claimants.

His Honour Judge Platts took account of the fact that the commission received increased significantly by inclusion of the premium for PPI and that although payment of commission was known to borrowers, the precise amount was not.

He said: “If the debtor knew the amounts involved she would have had a clear picture from which to make an informed decision as to whether or not what was being offered to her was in her best interests.”

It was also acknowledged that whilst the lender could not be held liable for anything said or done by the broker, the Judge still found that the claimants were led to understand that the PPI had to be taken as a condition of the loan (though the documents stated otherwise) taking the view that the debtor was an “unsophisticated” borrower.

“It seems to me if the consumer is paying £15,000 for a policy of insurance he is entitled to know in the interest of fairness that less than one half is actually going to pay for the policy and more than half is going to be paid in commission to the broker and the lender who is effectively selling the product to the consumer,” the Judge continued.

The Court found that the amount involved gave incentive to the broker to sell the product and that although the primary duty of disclosure is on the broker this does not remove the necessity from the lender to ensure that the broker has discharged his duty.

The exact redress due to the borrower is yet to be quantified.

Jonathan Newman, legal expert and partner at the solicitor firm Brightstone Law, said that the case was significant as it was one of the first known cases on unfair credit relationships where PPI mis-sale has been used as the basis for the claim.

He said: “This outcome could affect a lot of brokers, and lenders also need to worry as under the relatively new Section 140A of the Consumer Credit Agreement the Courts have wide powers to give awards, compensate borrowers and redraw credit agreements.Section 140A applies to Consumer Credit Act loans and unregulated loans.

“What we can learn from this case is that the Courts are looking for complete transparency in the payment of commissions where borrowers are designated as “unsophisticated”. Here there was a “huge lacuna” of evidence. Better record keeping including recording of phone conversations, can be the difference between success and failiure in defending these claims..”

He added: “In this case the borrowers succeeded on the facts as the terms of the policy were deemed particularly unfair and expensive, In future cases where the terms are different, the disclosure clearer, and the broker available to provide better evidence as to what events took place at the point of sale the outcome may just be different.”

important county court decision could impact lenders brokers

[Fred_Funk]

Nemo

 

Interesting as that is, I'm not convinced of its relevance here.

 

No-one is suggesting that claims for mis-sold PPI can't be taken to court, merely that if you chose to do so you can't rely on the principles identified by the FSA and upheld in the recent Judicial Review.

 

As far as I can see, the case you have highlighted above does nothing to dispell this notion as, clearly, there is no reference to the FSA's principles, rather the claim was brought under section 140A of the Consumer Credit Act.

 

Moreover, it seems one of the principle reasons the judge found in favour of the claimant was because of the 'unsophisticated' nature of the borrower, allayed to the underhand tactics of the lender which, I imagine, might be far less clearcut in the many claims.

 

In any case, the report describes the exact redress to the borrower as 'unquantified'. Certainly, there is no suggestion that they will receive compound interest in restitution which was, as I understood it, why some posters were advocating pursuing mis-sold PPI claims via the courts rather than the FOS.

 

As ever, I don't profess to be any kind of expert in this - the only claim I make is to have done a fair bit of reading around the subject - and would be interested to hear the views of others.

 

Thanks in anticipation

Fred_Funk

[MadKit]

Nemo? I must have missed something about the posting but I thought it was caro?

 

I'm very inclined to trust one of the Site Team if they judge that this case is of use and relevant to what is being discussed on this thread and I don't think either you or Contador have been targeted in any way or the Site Team "has it in for you". Again, perhaps its me and I've missed something again but we're all in this to help and obtain as much as advice from each other as we can and every comment is welcomed.

 

I'm pretty sure I posted the case to refer to when claiming compound interest, its one I've used before successfully and as far as I know, the one quoted when going to court. What more were you looking for Fred_Funk?

 

From what I understand and happened in one of my claims, when Claimants sign a confidentiality agreement the redress or payout is "unquantified" as it forms part of a separate court order. After all, they wouldn't want to know how much they had to shell out now would they?

 

MadKit

[caro]

No-one is denying that you can't go to FOS, but you'll have a hell of a long wait which is unnecessary, and if FOS get flooded with tens or hundreds of thousands more claims they'll be struggling even more to keep up with the workload.

 

Like you Fred, we're all looking for the best way to proceed and make sure the facts are readily available for people to make informed decisions about how they wish to proceed.

[Fred_Funk]

Nemo? I must have missed something about the posting but I thought it was caro?

 

I'm very inclined to trust one of the Site Team if they judge that this case is of use and relevant to what is being discussed on this thread and I don't think either you or Contador have been targeted in any way or the Site Team "has it in for you". Again, perhaps its me and I've missed something again but we're all in this to help and obtain as much as advice from each other as we can and every comment is welcomed.

 

I'm pretty sure I posted the case to refer to when claiming compound interest, its one I've used before successfully and as far as I know, the one quoted when going to court. What more were you looking for Fred_Funk?

 

From what I understand and happened in one of my claims, when Claimants sign a confidentiality agreement the redress or payout is "unquantified" as it forms part of a separate court order. After all, they wouldn't want to know how much they had to shell out now would they?

 

MadKit

 

Sorry, meant Caro not Nemo.

 

I'm not disputing that there's an argument for claiming compound interest in restitution - indeed I did so myself with my bank charges - and would agree that, should you elect to go down this route, you should do so on the basis of Sempra.

 

Nor am I arguing against going to court, especially if you want to avoid a ridiculously long wait, I'm merely saying that is seems to me Contador is correct and that if you do so you shouldn't rely on the principles outlined by the FSA and upheld in the Judicial Review as they aren't, it seems, actionable in court.

 

Fred_Funk