A landmark legal decision by the Supreme Court has led to the City watchdog’s consideration of new rules for Payment Protection Insurance (PPI) Claims. The decision came from the case Plevin vs Paragon Personal Finance in which Susan Plevin, a 59 year old college lecturer, was charged an upfront premium of £5,780 on a loan of £39,870. It was uncovered that 71.8% of this premium was commission, with Paragon taking £2,280 and the broker LLP Processing, receiving another £1,870. The failure to disclose this commission fee, the Supreme Court said, was a breach of the 1974 Consumer Credit Act, meaning that the sale was deemed unfair. The FCA responded to the ruling, implying that the non-disclosure of commission could be another route of financial mis-selling for which consumers could be compensated: ‘ 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 has been reported that consumers who were mis-sold Payment Protection Insurance (PPI) on their credit cards may not have been refunded all of the money that they were owed. According to an investigation by the BBC PPI compensation pay-outs could have a £1bn shortfall.
The Financial Conduct Authority (FCA) has issued its largest ever retail fine (£117m) to Lloyds Bank Plc, Bank of Scotland Plc and Black Horse Ltd (together Lloyds) for failing to treat their customers fairly when handling Payment Protection Insurance (PPI) complaints between March 2012 and May 2013. During the relevant period Lloyds assessed customer complaints relating to more than 2.3 million PPI policies and rejected 37% of those complaints.