Martyn James and TV legal expert Gary Rycroft answer the key questions
Payment Protection Insurance (PPI) – the biggest financial mis-selling scandal of all time, involved upwards of 64 million policies, more than a decade of claims and court cases and billions in compensation.
Eventually, the Financial Conduct Authority (FCA) introduced a deadline for making claims, after which a very firm line was drawn under PPI. This was, in part, to tackle some of the appalling behaviour by some claims management companies who had been cold calling people endlessly and cashing in by doing very little work for big rewards.
At Resolver, we helped sort out more than 2.5 million PPI cases for free before the deadline passed on 29 August 2019. In the final hours we received hundreds of thousands of complaints as bank computer systems collapsed and people rushed to register their claim. And that was the end of that.
Or was it?
In the last week, a number of ‘no win, no fee’ solicitors have been highlighting a recent court of appeal case that might mean some PPI complaints could be squeezed for more cash, one last time.
This does involve a genuine court case though, so top TV legal expert Gary Rycroft gives his view on the case and its implications.
The Plevin problem
Before we tackle the court judgement, we have to take a brief history lesson and look at the case that led directly to the new decision. This is known as ‘Plevin’ after the person who brought the complaint.
Back in 2014, Susan Plevin took a court case to the Supreme Court, where she won. The court ruled that she had been treated unfairly because she wasn’t told about the large amount of commission (72%) taken from her PPI payment.
‘Commission’ here relates to the amount of money that was paid to the broker or lender for selling the PPI policy. I think we can all agree that 72% is a huge rate of commission. Believe it or not, there are some even higher rates of commission out there.
In the Plevin case, the Supreme Court ruled that the non-disclosure of commission of 71.8% of the total PPI cost was unfair because it led to a sufficiently extreme inequality of knowledge and understanding. In straightforward terms, if you’d been told about the size of the commission, you’d have told the firm where to go. Importantly, the court said the tipping point for the creation of an Unfair Relationship was difficult to assess but 71.8% was way beyond it. So no definitive limit on ‘appropriate’ commission was set.
The Supreme Court also held that it was of critical importance that Mrs Plevin was aware of the size of the commission and the fact that she would have questioned it.
What happened next?
The Supreme Court is the highest authority in the land. There’s no appeal beyond their judgement realistically – so panic ensued across the finance sector. The ruling meant people who had been turned down for a PPI claim could have a second bite of the cherry by claiming back their PPI commission.
After much discussion the FCA came out with a detailed guide to how compensation should be worked out when commission claims were made. Central to that was setting a limit on what ‘appropriate’ commission levels were. As a regulator, the FCA was able to set that limit and chose 50%, so all commission cash over 50% was refundable as compensation.
How is this different to a standard PPI claim?
PPI was all about mis-selling. So if the bank, credit firm or financial ombudsman (or, indeed, the courts) felt that you were mis-sold the policy because it wasn’t suitable for you or your circumstances, you’d get a full refund of the premiums plus interest. So if you’ve won a standard PPI mis-selling complaint, you’ve had all the commission back already.
So what’s the deal with the new case?
The latest case – Potter versus Canada Square – argues that the claimant should have all the commission back. It’s a complicated ruling, covering all kinds of things, including the Plevin case. But in short, the court agreed.
A key factor in the new case is the issue of ‘concealment’ and the Limitation Act 1980, section 32. The Statute of Limitations Act covers when you can bring a court case.
Under this provision, the usual time period to bring a claim – which is six years – does not begin until the claimant becomes aware of the concealment, so it means claimants may potentially bring a claim outside the usual PPI deadline.
So, the real-world implication is that if you have a PPI claim and there is an element of undisclosed commission and concealment which would create an unfair relationship, you could potentially bring a new complaint after the deadline has passed.
So are PPI claims back on then?
No – for now. This is a specific ruling on commission that might only apply to claims unmade or partial refunds for people who have already made a Plevin complaint but now want to go after the other 50%.
However, the history of PPI is littered with complex court cases and this decision will undoubtedly be appealed. So hold fire for now and don’t sign up with claims managers or ‘no win no fee firms’ just yet.
We all need to wait and see what happens next. The new court case does potentially have a wider impact on PPI commission claims, but we haven’t reached a definitive answer yet.