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Plevin v Paragon: Why you could now be owed PPI compensation

Due to the Supreme Court’s decision in a PPI case called Plevin v Paragon and new rules from the Financial Conduct Authority (FCA), as of 29 August 2017 you could be entitled to compensation, even if you’ve previously had a claim rejected.

It is clear that the enormous commissions on offer to the banks proved far too tempting, leading to a culture of mis-selling that created the whole PPI scandal. Of course the banks didn’t want customers to know that an average of 67% of a PPI policy was pure commission to the bank, so they simply chose not to tell customers this information, for obvious reasons.

Given the end of August is just around the corner, we’re here to tell you all about the Plevin v Paragon case, how you could be owed compensation, and how to go about claiming it.

What is the Plevin v Paragon case?

Susan Plevin is a 59-year-old college lecturer who took out a loan of £34,000 from the lender Paragon Personal Finance to pay off her debts and make some home improvements. On top of this she was coerced into taking out a PPI policy over five years from Norwich Union, at an upfront cost of £5,780.

However, the PPI policy that Norwich Union was selling was only worth £1,630 with the remaining £4,150 being kept by Paragon and the broker who recommended Paragon to Mrs Plevin, by way of commission.

Mrs Plevin took Paragon Personal Finance to court to make the case that she was mis-sold PPI as Paragon chose not to divulge how much commission they were making as a result of the sale of the PPI policy. Mrs Plevin argued that had she known that such a large amount of what she was paying was pure commission she would not have decided to have taken the PPI policy.

This case was presented to the Supreme Court in June 2014 and in November of that year the judge confirmed that Mrs Plevin was treated unfairly by Paragon and they did mis-sell PPI.

What effect has the Plevin v Paragon case had on PPI claims?

Because of the Supreme Court ruling that Paragon mis-sold PPI to Mrs Plevin and treated her unfairly, the Financial Conduct Authority (FCA) introduced additional rules and guidance with PPI compensation. This was finalised in their policy statement on 2 March 2017 and the new rules and guidance will come into effect on 29 August 2017.

These new rules are:

  • If over 50% of your PPI went as commission to the lender without your knowledge you are owed compensation.
  • Lenders will have to inform people who’ve had past claims rejected or who have a mis-selling claim currently in progress about the new Plevin rules by the end of November 2017.

Here at Your Money Claim, we feel that the 50% benchmark for commission compensation is still unfair and we will continue to fight this through the courts.

Here’s what the FCA have said about the Plevin V Paragon case:

“The Plevin decision introduced a significant new uncertainty into an already uncertain landscape, where the long tail of PPI complaints looked set to continue. So, we have used our regulatory judgement to create a framework that we believe will reduce uncertainty and enable firms to take a fair and consistent approach to handling PPI complaints. This will help ensure the best outcomes for consumers at the earliest stage in the complaint process, and will make it easier for us to act if we become concerned that firms are not handling complaints appropriately”.

Next steps

If you’ve already had a successful claim then unfortunately you won’t be able to claim again via Plevin. But, even if you’ve been rejected previously, you may still have a claim because lenders could have taken large amounts of commission without telling you, so it’s worth trying again.

We can help you get back the money you’re owed, so claim now for stress-free compensation.

About the author

Josh Salvage

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