THE deadline to claim for mis-sold payment protection insurance from your bank or building society has passed, but you may still be able to get money back through the courts.
Law firms believe that Brits can still get money back for commission payments that banks took without telling them by using Plevin claims. We explain how it works.
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Banks have forked out £38bn in compensation for mis-sold PPI in what has been one of the largest consumer redress schemes in British history.
Investigations by the City watchdog found around 64m policies were sold, mainly between 1990 and 2010, with Brits in many cases unaware that they had it or unable to claim.
Consumers had a deadline of August 29 2019 to make a claim with their bank or the Financial Ombudsman Service.
Further claims for mis-sold PPI can no longer be made to your bank or the Financial Ombudsman Service but law firms claim there is still a way that thousands of people could get money back.
Solicitors are taking claims to court on behalf of consumers based on a Plevin ruling that said banks should also repay commissions earned for selling the products.
They claim this is separate to the PPI redress scheme that ended in August 2019.
Here is how it works.
What is payment protection insurance?
You may have been sold PPI if you took out finance during the 1990s or the start of the 2000s.
It was an insurance policy that was attached to products such as loans, mortgages or credit cards.
PPI was meant to payout if the policyholder fell ill, had an accident or lost their job.
It took lots of different names such as:
- Accident, sickness and unemployment insurance (ASU)
- Account cover
- Credit insurance
- Credit protection
- Loan care
- Loan insurance
- Loan protection
- Loan repayment insurance
- Mortgage payment protection insurance (MPPI)
- Payment cover
- Protection plan
How was PPI mis-sold?
Consumer groups started questioning the sales practices of banks and building societies around 2005 after it was found that many borrowers were unaware that they had been sold policies.
Some were also unable to claim despite paying for the insurance such as if they were self-employed or retired.
Another issue was that staff were incentivised to sell PPI with high commissions, which meant a lot of policies were mis-sold.
PPI sales were banned in 2009 and lenders were ordered to consider all complaints in 2011.
The FCA set a deadline for complaints in 2017 that said all redress should be considered by the end of August 2019.
But law firms believe they can still help those who weren’t told about commission that was paid to providers using Plevin claims.
This is based on a court ruling in 2014 that found a customer called Susan Plevin was unfairly treated as she was not informed about commission that was taken from her PPI payment.
What is the Plevin ruling?
The Supreme Court ruled in 2014 that a lender’s failure to disclose a large commission when PPI was sold can be defined as unfair under the Consumer Credit Act.
It came after Susan Plevin took her lender, Paragon Personal Finance, to court after discovering that 72% of the £5,780 premium she had paid for her PPI policy wasn’t protection her but was being paid as commission.
This set a precedent for other borrowers who could be owed redress for compensation that they paid out as well as if they were mis-sold.
What is a Plevin claim?
PPI mis-selling happened in a few ways.
You may not have realised that the product was sold to you or it may not have been appropriate.
Separately, you also may not have realised you were paying commission for the product or it may not have been clear how much of your premium was being pocketed by your provider as commission.
In some cases, a borrower may not have been mis-sold PPI but could have been unaware of the commission.
The FCA said in 2018 that if over 50% of your PPI bill went on commission to the lender and you weren’t told about this then you are due a refund.
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How is Plevin different from mis-sold PPI?
Plevin PPI claims only involve commission that you may have paid to your lender or provider that wasn’t made clear when you first took out the product.
Cases involving Plevin PPI won’t look into whether the product was mis-sold but will focus on the commission levels and if you were aware of how much you were paying.
This is because the deadline for complaining about mis-sold PPI to your provider or the Financial Ombudsman Service has now passed.
But lawyers argue that there is no deadline for Plevin claims as this is separate to the redress scheme that the financial regulator had introduced in 2011.
They argue that there is no deadline as claims are based on the unfair treatment of customers under the Consumer Credit Act 1974.
Can I claim Plevin?
You won’t be able to make a claim if you have already received a payout for a mis-selling complaint.
You could be eligible if you haven’t previously complained about mis-sold PPI or you have had a claim rejected.
In some cases, you may have only had some of the commission refunded in a Plevin claim so you could try to get the full amount.
Can you claim PPI and Plevin?
The PPI claims deadline has passed.
Borrowers had until August 29 2019 to make a claim from their bank or through the Financial Ombudsman Service for mis-sold PPI.
This means you can now only make a Plevin claim as lawyers are arguing that there is no deadline for this.
How do I claim Plevin?
Banks were forced to consider all claims up until the PPI deadline in August 2019.
This is no longer the case though.
You can try complaining to your bank but some law firms are instead issuing legal proceedings and taking providers to court to get money back.
Many are operating on a no-win-no-fee basis.
This means they most likely won’t take your case unless there is a good chance of success.
Make sure you understand what fee they will take out of your compensation though as it could drastically reduce your payout.
There is also a risk that if you do lose you could be held liable for the bank’s court costs.
Not all cases will be viable, especially if it is only for small amounts and law firms may have a minimum figure that they will work with.
Check if you are eligible to make a Plevin claim with Fuse Legal here.
How successful are Plevin claims?
There is no guarantee that your claim will be successful and you will need to provide evidence that you were unaware of any commission being paid.
Some cases have been successful though.
Canada Square Operations — which ran popular credit card Egg — tried to block a claim by customer Beverley Potter in September 2019 by arguing it had come too late.
Beverley had taken out a loan of £17,000 from Egg in 2006.
She had taken out PPI cover for that loan, but did not know that 95% of her payments would go towards commission.
It is no longer possible to make a Plevin claim to your bank or through the Financial Ombudsman Service.
A county court ordered the Citibank-owned brand to repay Beverley £7,954 in compensation as it was a breach of the Consumer Credit Act.
The bank appealed and lost at the Court of Appeal in March 2021, which meant the redress could be repaid.
This has been described as a test case for others.
How long do Plevin claims take?
There is no set timeframe for Plevin claims.
If you complain to your bank then they usually have to respond within eight weeks.
You can complain to the Financial Ombudsman Service if your claim is rejected and this can take up to 90 days.
Alternatively, launching legal action can take anything from six to 12 months so it could be a long and stressful process.
Is there a deadline for Plevin claims?
You can no longer make claims for mis-sold PPI but lawyers argue that there is no deadline for using the Plevin case to apply for redress.
This is because the claim is made under the Consumer Credit Act so can be made at any point.
Does Plevin apply to mortgages
PPI was sold alongside a range of financial products including mortgages.
This means you could have been mis-sold PPI if you took out a home loan in the 1990s but it is too late to claim for that.
You could still check if there was commission paid to your bank when you got your mortgage that you were unaware of though.
How is Plevin compensation calculated?
The FCA has previously ruled that borrowers could be owed compensation if the redress paid was more than 50% o the premium.
Compensation has typically been calculated as the amount above the 50% threshold.
So if the bank took a commission off your premiums of 70%, you could get 20% back as compensation using the Plevin claims process.
How much am I likely to get back?
Law firms claim payouts could range from £1,000 to £40,000 , with the average amount about £3,000.
A portion of your compensation may have to be paid as a fee to the law firm though.
Some firms may offer Plevin calculators that estimate how much you could be owed based on the PPI you had.
Check if you are eligible to make a Plevin claim with Fuse Legal here.
