Millions of Britons could demand lucrative PPI pay-outs in ‘second wave’ of compensation after courts find products were ‘unfair’
- Court rulings say PPI was ‘unfair’ because banks did not disclose commissions
- Commissions on some products amounted to 95 per cent of the cost of policy
- The deadline for making a PPI claim was set by the government as August 2019
- But court rulings mean those missold PPI could now make claims against banks
Banks are facing a ‘second wave’ of payment protection insurance (PPI) pay-outs, according to reports.
It comes after a series of court rulings found the products, which were sold to millions of Britons, were ‘unfair’, reports The Times.
The court rulings mean those who were denied compensation or those who received only partial refunds could demand all of their money back, the paper reports.
Those who never claimed compensation for missold PPI, after the government imposed a deadline to submit claims by August 2019, could also now make a claim.
PPI was a type of insurance often added to products such as store cards, credit cards, mortgages and loans.
Banks are facing a ‘second wave’ of payment protection insurance (PPI) pay-outs, according to reports. It comes after a series of court rulings found the products, which were sold to millions of Britons, were ‘unfair’, reports the Times
But the insurance, which was intended to protect people if they could not keep up with their payments – because of illness or unemployment, for example – was widely mis-sold.
Customers were pressured into buying it, did not know they had it or it was unsuitable for them.
Banks have already forked out £38bn in compensation for missold PPI, in what is the largest consumer redress scheme in British history.
Around 64million PPI policies were sold, most between 1990 and 2010, while about 32.4million claims have been made, according to the UK’s financial regulatory body, the Financial Conduct Authority (FCA).
But according to The Times, this amount could jump sharply after a series of court cases mean people can also complain on the basis that high commission was earned from the sale of the policy but they were not told.
In some cases the commission accounted for more than 95 per cent of the cost of the policy and these commissions were never disclosed to customers, reports the paper.
One customer from M&S Bank has already been awarded another £7,800, after originally being given compensation of £3,000, reports the Times
Banks are also spending huge sums of money attempting to fight the claims, including the Royal Bank of Scotland, who hired a top barrister to fight a £1,500 claim, the paper says
In a judgment in 2014, the Supreme Court in a case of a widowed college lecturer who was sold PPI as part of a loan, found this ‘unfair’.
Courts have since ruled that customers may have questioned the value of PPI policies had they known about them.
One customer from M&S Bank has already been awarded another £7,800, after originally being given compensation of £3,000, while another, who banked with HSBC, was given an extra £4,00 after initially being given £600, according to The Times.
Banks are also spending huge sums of money attempting to fight the claims, including the Royal Bank of Scotland, who hired a top barrister to fight a £1,500 claim, the paper says