Ruling could pave way for new/reopened PPI claims where a broker commission was charged

[Michael Browne]

Banks could face even bigger bills for mis-selling Payment Protection Insurance after the City watchdog said it was considering new rules following a landmark legal decision.

 

In November last year, the Supreme Court said that Paragon Personal Finance, a secured loans company,

had breached the Consumer Credit Act by failing to disclose that the PPI premium paid by a customer included a hefty commission fee to a credit broker.

 

This means that even if the loan insurance was otherwise fairly sold, banks could be liable for mis-selling compensation if PPI was bought via a broker.

 

On Wednesday, the FCA said the judgement in the case, Plevin v Paragon Personal Finance,

may mean new rules on dealing with complaints, potentially opening the door for more compensation.

 

“The FCA is considering whether additional rules and/or guidance are required to deal with the impact of the Plevin decision on complaints about PPI,” it said.

 

“The FCA will be engaging with relevant stakeholders in the coming months in respect of this

and it expects to announce its views on this, including next steps, at the same time as existing work.”

 

The regulator is considering revamping the PPI rulebook, saying it wants to

“meet its objectives of securing appropriate protection for consumers and enhancing the integrity of the UK’s financial system”.

 

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11633767/Legal-ruling-could-pave-way-for-new-wave-of-PPI-claims.html

 

 

PPI ruling may trigger a landslide of fresh mis-selling claims

 

The City Watchdog could be forced to introduce new rules around PPI mis-selling complaints following a landmark court ruling.

 

It could open the door to a landslide of fresh claims for compensation, even for those who have already been paid out for being flogged the often useless and expensive insurance.

 

The latest wrinkle to the scandal – which has already cost Britain’s banks an estimated £24 billion – centres on commission payments to lenders and advisers.

 

In November, the Supreme Court ruled in the Plevin v Paragon case that failing to disclose commission made the relationship between lender and borrower unfair.

 

Susan Plevin, a 59-year old college lecturer, was charged £5,780 as an upfront PPI premium on a £39,870 loan.

 

But almost three-quarters – 71.8% – of the premium was commission, with credit broker LLP Processing receiving £1,870 and lender Paragon getting £2,280.

 

Plevin was not told about the commission and took proceedings against the two firms in 2009 for mis-selling because the policy was useless for her,

but also on the basis that the PPI agreement was unfair because of the non-disclosure of the commissions.

 

The Supreme Court’s Lord Sumption ruled that failing to disclose commissions led to a “sufficiently extreme inequality of knowledge and understanding”.

http://www.standard.co.uk/business/business-news/ppi-ruling-may-trigger-a-landslide-of-fresh-misselling-claims-10277984.html

[citizenB]

This has just been brought to my attention.

 

 

 

 

The City Watchdog could be forced to introduce new rules around PPI mis-selling complaints following a landmark court ruling.

 

 

 

It could open the door to a landslide of fresh claims for compensation, even for those who have already been paid out for being flogged the often useless and expensive insurance.

 

The latest wrinkle to the scandal – which has already cost Britain’s banks an estimated £24 billion – centres on commission payments to lenders and advisers.

 

In November, the Supreme Court ruled in the Plevin v Paragon case that failing to disclose commission made the relationship between lender and borrower unfair.

 

 

 

Susan Plevin, a 59-year old college lecturer, was charged £5,780 as an upfront PPI premium on a £39,870 loan.

 

But almost three-quarters – 71.8% – of the premium was commission, with credit broker LLP Processing receiving £1,870 and lender Paragon getting £2,280.

 

 

 

 

Because LLB went bust, she was paid £3,000 from the Financial Services Compensation Scheme but the case against Paragon continued through the court until last year’s ruling.

 

The Supreme Court’s Lord Sumption ruled that failing to disclose commissions led to a “sufficiently extreme inequality of knowledge and understanding”.

 

 

Full story read : - http://www.standard.co.uk/business/business-news/ppi-ruling-may-trigger-a-landslide-of-fresh-misselling-claims-10277984.html

[citizenB]

https://www.supremecourt.uk/decided-cases/docs/UKSC_2014_0037_Judgment.pdf

 

The FCA Page referring to this is on scheduled maintenance at the moment - I will get the link when it is available.

[citizenB]

Press Summary.

 

https://www.supremecourt.uk/decided-cases/docs/UKSC_2014_0037_PressSummary.pdf

 

 

 

Mrs Plevin took out a personal loan through LLP Processing (UK) Ltd (“LLP”). LLP proposed that she borrow £34,000 from Paragon Personal Finance Ltd (“Paragon”), repayable in instalments over ten years, and that she take out PPI for five years with Norwich Union, Paragon’s designated insurer. The PPI premium of £5,780 was payable at the outset and added to the amount of the loan. 71.8% of the premium was taken in commission: LLP retained £1,870 and Paragon retained £2,280. The Financial Industry Standards Association guide which LLP gave to Mrs Plevin told her that “commission is paid by the lending company”, but she was not told the amount of the commission or the identity of the recipients.

 

 

 

Sections 140A to 140D of the Consumer Credit Act 1974 apply to Mrs Plevin’s loan and PPI. They allow a court to reopen a credit agreement which is unfair because of any of the terms of the agreement or a related agreement, the way in which the creditor has exercised or enforced his rights, or “any other thing done (or not done) by, or on behalf of, the creditor” (s 140A(1)©). Mrs Plevin argues that the relationship between herself and Paragon was unfair under s 140A(1)© because of (i) the non-disclosure of the commissions and (ii) the failure of anyone involved to advise on the suitability of the PPI for her needs. Insofar as LLP committed these defaults, she says it did so “on behalf of” Paragon.

 

The Insurance Conduct of Business Rules (“ICOB Rules”) are the statutory rules which regulate the insurance industry. They do not require insurance intermediaries to disclose commissions to their customers. They do require an insurance intermediary which makes a “personal recommendation” to a customer to buy an insurance contract to take reasonable steps to ensure that the recommendation is suitable for the customer’s demands and needs.

 

Full summary in the link at the top of this post.

[fkofilee]

Ooooo! This is most interesting indeed!

[citizenB]

https://www.fca.org.uk/news/statement-plevin-paragon-personal-finance

 

FCA Statement on the Judgment.

[citizenB]

http://www.theguardian.com/money/2015/may/27/banks-face-bigger-ppi-mis-selling-bill-regulator-compensation-rules-fca-supreme-court

[dx100uk]

this is what postggj eluded too years ago with welcome finance and the hidden commission payments made to all the 'subsiduary' brokers the had under various names

 

 

funny how things come around.

 

 

mike

[sillygirl1]

Paragon here I come, found a bit of paperwork from 2006 which clearly shows PPI paid UP FRONT on a loan which was repaid early. PPI at the time was useless as I was in full time employment with 6 months full pay and 6 months half pay - will keep the forum posted on what happens.

 

I will quote this case in my letter and see what Paragon do.

[maroondevo52]

Paragon here I come, found a bit of paperwork from 2006 which clearly shows PPI paid UP FRONT on a loan which was repaid early. PPI at the time was useless as I was in full time employment with 6 months full pay and 6 months half pay - will keep the forum posted on what happens.

 

I will quote this case in my letter and see what Paragon do.

 

Have you already claimed back the PPI ?

[sillygirl1]

I didn't even know that I had PPI until I found the letter in a pile of old paperwork - came as a complete surprise.

[maroondevo52]

I didn't even know that I had PPI until I found the letter in a pile of old paperwork - came as a complete surprise.

 

Good stuff, hopefully you'll get a healthy payout.

[citizenB]

Please do keep us updated with your progress, SG

[sillygirl1]

Will do - I will get a letter to them next week (and include a copy of their original letter with my request for repayment of the PPI). The letter appears to be the only paperwork I have on this loan so maybe I should CCA them as well.

[dx100uk]

sar would be better

 

 

dx