Why you may want to get help with PPI

They did what?

Why you may need to get help with PPI

Sometimes it pays to get help with PPI.  One of the more interesting cases brought against a finance company was Plevin vs Paragon Finance Ltd.  We won’t bore you with all the detail.  You can read the Financial Conduct Authority’s (FCA’s) statement if you like here: http://www.fca.org.uk/news/statement-on-payment-protection-insurance-ppi.

However this is worth knowing…

In the Plevin case, 72% of Mrs Plevin’s PPI premiums went as sales commission. Think about that, the PPI should only have cost Mrs Plevin just over a quarter of what she was actually charged. The rest was just to line the pockets of people in the middle.

It gets worse.

The average commission paid on PPI was 67% according to the FCA. So, two-thirds of what consumers paid for PPI was sales commission. Perhaps it’s no wonder that some people selling these policies had an incentive to play a little fast and loose!

You may also find this remarkable…

The previous regulator (the Financial Services Authority) decided that salespeople didn’t always have to tell consumers how much commission they would pay.  That seems to have opened the flood gates to huge commissions which were bound to create mis-selling problems.

The judge in the Plevin case decided that because Mrs Plevin was not told about the huge commission the whole contract was unfair and could be challenged.  A judge in an earlier case called such commission levels “startling”.  At least some of the judges get it even if the banks and the regulators sometimes don’t.

Following this case, the FCA decided that:

If the commission on PPI was 50% or more of premiums, and there was a valid PPI claim, that extra compensation should be paid.

Great – what’s the problem?

The FCA also decided that if a claim has already been paid and did not include this extra compensation, then the company can keep quiet about it.

That is, even when the lender knows that they have not paid out the right amount they don’t have to tell their consumers.

Conclusions

  1. You cannot always rely on the banks or even it seems the regulator to act in your interest without a nudge now and again.
  2. Unless you keep close to things like court rulings, you could lose out.

It shouldn’t really be this way, but you may need to get help with PPI to make sure you are not being short-changed.  In our view, this kind of thing shows that the deck is sometimes stacked against the consumer.  Unless consumers have the time and expertise to watch such developments, they could easily miss out if they don’t have someone fighting their corner.

 

image credit: Splitshire