23 November 2015
Just when you thought that the embarrassing PPI mis-selling saga was beginning to quiet down, something else comes along that rocks the boat.
Payment protection insurance (PPI) was, as we know, a policy that was mis-sold to thousands of people. Over the years, billions of pounds in compensation have been paid to people but there seems to be yet another twist on the horizon: the subject of commission.
It is known that the banks were making massive profits on the sale of PPI policies (up to 80% per PPI policy at some time or other) and that some representatives who sold the policies were also being paid significant commission payments.
And it is these commission payments that now seem to be the issue. In a case brought by a customer, Susan Plevin, she argued about the commissions paid on a loan on which PPI was attached. She brought the case against a company called Paragon Personal Finance. She argued she was entitled to further compensation as the person who sold her PPI had not disclosed to her the large commission they would receive. She told the court that under the 1974 Consumer Credit Act that this was unfair.
In Susan Plevin's case, on a loan of £34,000 a commission was paid of more than 70% to the person selling her the policy. The court agreed and now, Ms Plevin is entitled to compensation.
Of course, this sole case has implications across the board as the likelihood is that thousands of other customers were also not informed that the seller was receiving commission and, when they were told, the customer was not made aware of how much commission they would receive. In the above case, the 70% commission was part of a PPI policy that cost nearly £6,000.
The shudders down the spine of the British Banking industry is such that banks are now braced for the news that once again, they will need to make extra provision to compensate customers for unfair sales practices relating to either not disclosing commission was being paid and not disclosing how much.
As yet, there has been no further comment nor decision about how or when compensation payments relating to PPI claims can be made.
In the meantime, if you have a claim for mis-sold PPI, contact Scottish PPI Claims who can assess your potential claim quickly, notifying you of how much compensation you could claim back.