With the deadline to claim payment protection insurance (PPI) just 12 months away, Lloyds Banking Group has revealed that it paid out more than £460 million in PPI compensation between April-June. The payouts compensated customers mis-sold the product.
Lloyds Banking Group
As one of the major names in the PPI mis-selling scandal, Lloyds has so far paid out just under £19bn of the total £30bn bill since 2011. Due the the deadline to make a PPI claim nearing, banks expect a higher volume of complaints. For this reason, they have topped up provisions from £90m to £550m to repay customers in the second half of 2018.
PPI
PPI is a financial product that was sold to customers to protect them in the event of them being unable to repay a loan or similar credit agreement. However, many people were unknowingly or wrongly sold this product. This resulted in one of the largest financial scandals in history that lenders and financial regulators have worked to rectify since 2011.
A case in the PPI timeline opened up fresh grounds for complaint in 2014. Many consumers can now also claim under the Plevin rule.
Plevin v Paragon
Plevin v Paragon was a historic case that changed the way PPI claims are made. A retired lecturer, Susan Plevin, looked into her own PPI claim. She found that her bank had taken 71.8 percent of the PPI premium as commission. Therefore, she argued that this amounted to an unfair relationship. The judge ruled in Plevin’s favour.
Following the ruling, the Financial Conduct Authority (FCA) stated that commission over 50 percent was unfair to the customer. This gave fresh grounds for complaint to many consumers, even if their PPI complaint had previously been rejected.
A recent landmark ruling regarding Plevin could result in payouts being higher than ever.
Doran v Paragon
Doran v Paragon is a recent case that could see PPI payouts more than triple in future cases.
The Dorans took their broker Paragon Personal Finance to court due to the level of commission on their PPI premium. 76 percent of the PPI premium payment was paid as commission to Paragon, resulting in an unfair relationship.
FCA guidelines recommend that compensation in unfair relationship cases equals the amount paid over the 50 percent commission. However, the Dorans were awarded the entire 76 percent commission by the judge.
With Lloyds quadrupling their PPI provisions, it appears they could be braced for a fresh round of payouts.
If you took out a PPI policy offered by Lloyds Banking Group, get in touch today. Our team of mis-selling solicitors can offer advice and support.