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Why did my PPI broker take such a high commission?

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You may have heard a lot of noise about the PPI deadline passing in August last year. What you may not have heard is that up to £10 billion, from people who rightfully deserve compensation, went unclaimed.

We’re here to discuss how people could reclaim their share of billions by checking the level of commission paid to their PPI broker.

What was the commission for?

Before the PPI scandal broke, PPI companies paid brokers a share of the policy to convince consumers to buy it.

Most PPI policies were mis-sold on the basis that the consumer was told that they needed it, or were misled on their suitability for the policy.

However, the brokers received large amounts of commissions on the policy to sell them. When they were financially incentivised, they may not have had their customer’s best intentions in mind when selling a product due to the payout. When the amounts were undisclosed, it resulted in an unfair relationship.

Read more: What is an unfair relationship claim?

How do I know how much commission I paid?

If you have a copy of your policy, you can simply check the breakdown of the payments in the summary. If you’ve lost your summary, your bank should have a copy that you can call and ask for.

What is considered a high commission level?

When the commission level passes 50 per cent of the policy and this was not disclosed to you, it’s considered an unfair relationship. This is because the duty of care shifts from the customer to the lender. It is up to the lender to prove that the relationship is fair.

One landmark case, Plevin v Paragon, highlighted this issue in 2014 and changed the way high commission PPI claims were handled by the court. The plaintiff, Susan Plevin, found that 71.2 percent of her premium was taken as commission, which she was previously unaware of. She argued that this constituted an unfair relationship under the 1974 Consumer Credit Act.

The Financial Conduct Authority (FCA) upheld the complaint, which had a huge impact on PPI claims. The FCA stated that when the commission is over 50 per cent and undisclosed, the consumer should be repaid any commission over that ‘limit’.

Read more: Plevin vs. Paragon

Other PPI decisions

Plevin was the first decision to shake the PPI industry, but others have followed and changed the way the courts have ruled on complaints.

Doran v Paragon, 2018

Just like the Plevin case, Christopher and Joanne Doran were unaware that an undisclosed excessive commission of 76 percent was paid to the broker. They argued that if they had known this, they would not have bought the policy at all.

The judge ruled that Paragon Finance has to repay the entire PPI policy to the Dorans, which set a new precedent for the cases.

APJ v Welcome Finance, 2019

Last year, we won a huge landmark decision after the PPI deadline to change the way the courts handled the claims.

In our case against Welcome Finance, using the Plevin and Doran precedent, we argued that our client James Martin-Smith’s policy did not fall under PPI mis-selling. Instead, the undisclosed excessive 85 percent commission resulted in an unfair relationship. This violated the Consumer Credit Act unfair relationship provision.

The judge ruled in our client’s favour. As a result, more claims could be made on the PPI commission level.

We’re urging anyone who has a PPI policy to check the amount of commission paid to the broker. We may be able to help you take back thousands.