From 2014, UK banks have had to consider a court ruling known as 'Plevin' when dealing with Payment Protection Insurance (‘PPI’) claims. Policyholders had two mechanisms for obtaining redress for PPI claims: (a) regulatory PPI redress for the mis-sale of PPI through the regulatory scheme established by the FCA; and (b) legal redress for Plevin claims through the recovery of the premiums paid or, where applicable, the excessive commissions charged on PPI policies due to the unfair relationship deemed to arise under s. 140A of the Consumer Credit Act.
Plevin Claims or simply ‘Plevin’ gets its name from a 2014 UK Supreme Court case brought by Susan Plevin. The Supreme Court ruled that the lender’s failure to disclose the significant commission charged on her PPI policy (71%) made the relationship between her and the lender unfair under s.140A of the Consumer Credit Act. As a result of this she was awarded the full amount of the commission plus interest.
However, there are court decisions where the full premium plus interest (both contractual and statutory) has been recovered by the claimant (Doran v Paragon Personal Finance (1) Limited, (unreported) (CC)). Unlike standard PPI claims, Plevin claims are legal claims. These claims are commenced through legal action and compensation is adjudicated by UK courts.
The FCA has no jurisdiction to adjudicate or set the compensation
for Plevin Claims.
In 2017, to establish a “tail” on the exposure of UK banks, the FCA established a two (2) year deadline on August 29, 2019 for claiming redress for PPI claims. Any PPI claim that was not filed prior to August 29, 2019; any PPI claim rejected by a lender; or any claim for which a lender paid the consumer the excess commission over 50% - the ‘tipping-point’ recommended by the FCA in its guidance for UK lenders - are all eligible Plevin claims entitled to legal redress pursuant to s. 140A of the Consumer Credit Act.
The number of PPI policies sold in the UK between 1990 and 2010 is estimated to be c.70 million PPI policies. The average rejection rate amongst lenders is estimated to be 25%, with the total estimated population of Plevin claims being c. 17.5 million claims. Management
estimates the real addressable market for Plevin claims is c. 3 million to 5 million claims.
The average commission banks were paid was 67%, and the average Plevin claim (excluding interest) is estimated to be c. £2,000 per claim. As of March 2020, UK lenders paid £38 billion in redress. There are currently millions of PPI claims that have not yet been processed as of the August 29th, 2019 deadline.
Plevin is now becoming the largest mass contract action in the UK. ATE insurance capacity is limited, as many insurers have been previously burnt, or are already at maximum capacity.
Plevin claims are often backed by litigation funders as a means of getting huge sums of cash out into the market, with relatively little risk to their capital.
How are Plevin Claims different from Mis-sold PPI?
A Plevin Claim is made in respect of the sale of a PPI policy, the grounds of the Claim is different to a Mis-sold PPI Claim. A Plevin Claim doesn’t consider if the original PPI policy was appropriate, it simply looks at whether the lender failed to disclose to you the high level of commission payable to them, making the relationship unfair.
Although the PPI deadline has now passed, Plevin Claims are not subject to that deadline. This is because the new Claims are based on a different area of law, notably the Consumer Credit Act 1974.
Are you able to make a Plevin Claim?
You may be eligible to make a Plevin Claim if:
• Your PPI policy was sold before 6 April 2007 and open after 6 April 2008, or sold after 6 April 2007;
• You have not previously complained about Mis-sold PPI;
• You have had a PPI Claim rejected; or
• You had a refund for the ‘Plevin only’ part of your PPI (a ‘tipping point offer’).
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