A recent court ruling in Manchester could lead to a fresh wave of PPI payouts. As a result, banks could pay out billions more in compensation.
Manchester County Court ruled that the Dorans were owed a total of £17,345. This was the amount of the full 76 percent commission that they paid on their policy. The payout is significantly more than the Financial Conduct Authority (FCA) guidelines.
The FCA advises that compensation should be awarded if the level of commission exceeds 50 percent of the total PPI policy. Therefore, PPI payouts should be the amount paid over 50 percent of the policy value.
However, the ruling that the Dorans should be awarded the entire 76 percent sets a new precedent. As a result, the banks may now be liable for £18bn in PPI payouts.
Plevin case and PPI payouts
The PPI scandal has been long-running, originally focusing on mis-selling. However, since the Plevin v Paragon case in 2014, the focus has shifted to the amount of commission paid on the policies to brokers. PPI payouts have surpassed £30 billion.
The ruling said that non-disclosure of high commission by the provider rendered the relationship between the parties unfair.
The most recent outcome on the Doran case marks a turning point for PPI claims. Providers will now have to remind customers of the commission amount for the duration of their policy.
Doran case shaping the landscape
Judgment on the Doran case is likely to have far-reaching significance, showing that the FCA advice on commission claims is not legally binding.
Claimants may expect to be paid in full if they challenge the advice. The payouts could cost the banks up to £18bn.
Informed but not reminded
The FCA recently published new guidance on complaints involving claims for regular PPI premiums.
The regulator said it requires firms to assess whether or not repeated commission payments were disclosed to the customer throughout the claim. If customers were only informed about commission prices at the start, they could also be awarded compensation.
Finally, if you have taken out a PPI policy it may be likely you’ve paid an unfair level of commission. You may be able to claim for compensation. Get in touch with one of our solicitors who can advise you on what to do next.