BRITS ripped-off in the PPI scandal have launched a new legal claim that could cost the banks up to £18billion.
The Sun can reveal legal papers were filed on Friday afternoon in Birmingham County Court against some of the UK’s biggest banks in a record class action suit.
The legal claim, led by law firm Harcus Parker, accuses banks of secretly charging a whopping 80% commission on personal protection insurance (PPI) sales, and not refunding this in their previous compensation claims.
Barclays, HSBC, RBS, Lloyds, MBNA, Santander, Tesco Bank, The Co-op John Lewis, Nationwide and Yorkshire Building Society have all been named in the class action lawsuit which has already gathered 350,000 claimants.
Harcus Parker estimates the average payout for individuals joining the suit will be around £2,500.
A legal win against the banks could help hard-pressed Brits afford rising bills in the cost of living crisis.
Damon Parker, senior partner at Harcus Parker, said: “This group action is intended to force financial institutions which profited from PPI to pay back money that they should have never taken in the first place.
“The banks and credit card companies have known for years that they should pay this PPI secret commission money and have been using every trick in the book to avoid paying.”
The case, which is listed as PPI Plevin Group Litigation, comes after around £36billion has already been paid back by the banks after regulators and the courts clamped down on the mis-selling on personal protection insurance alongside mortgages, credit cards and loans since the 1990s.
Around 50million PPI policies were sold and the high profits for banks led to a super-complaint from the Citizens Advice Bureau to the Office of Fair Trading (OFT) about the racket.
Legal wranglings through the years exposed how woeful the PPI policies were, with some customers being charged insurance premiums that were almost as high as what they could ever potentially claim.
The original deadline for customers to make compensation claims passed in 2019.
However, the new legal claim, led by Harcus Parker, is open to those who had a PPI claim rejected, or those who were only paid back the chunk of commission that was above a 50% premium.
PPI secret commission claims are sometimes known as “Plevin claims” after a case in 2015 when Susan Plevin took her lender, Paragon Personal Finance, to court after discovering that 72% of the £5,780 premium she had paid for her PPI policy was commission.
Lawyers said that their class action had a good chance of succeeding as the Supreme Court has already ruled in 2014 that a bank’s failure to disclose a large commission when PPI was sold can be defined as unfair under the Consumer Credit Act.
The new class action is targeting the millions of amounts of commission still kept by the banks.
“The public is presently unaware that banks still retain billions of pounds of profit from PPI.
“Our claim hopes to end PPI claims once and for all,” Mr Parker said.
A spokesman for UK Finance, the body that represents the banks and building societies, said: “The FCA’s deadline for customers to make a complaint to a firm which sold them PPI was in August 2019.
“Firms will review and respond to any claims made in legal proceedings as required.”
‘Completely unreasonable’
Retired lab technician Philip Sears thought he had a cast iron case to claim for compensation at the height of the payment protection insurance (PPI) mis-selling scandal.
But the 74-year-old from Leicester’s claim for a £2,500 refund was turned down by Nationwide Building Society, despite sending them a mountain of compelling evidence.
Mr Sears already had comprehensive sickness benefits with his employer, Leicester Polytechnic, when he was encouraged to take out PPI on a joint mortgage with his mother on a property in Devon.
Like the vast majority of those who took our PPI, he had no idea of the huge commissions earned by lenders on the premiums.
“They should have told me they were going to take up to 95% of the premiums for themselves,” said Mr Sears.
“You don’t mind eight, 10, or 12%, but to take that much is completely unreasonable, and not to tell me is also unreasonable, as was not paying my PPI claim.
“They were quite seriously out of order.”
With the rent on his Leicester flat going up £200, and energy bills still high, he said he would be “very happy to get something back – it would be very useful”.
“Maybe they could pay me some compensation on top of the £2,500 for all the stress and worry too,” he added.
‘Modern-day Dick Turpins’
Retired lorry driver Paul Pharo, from Hampshire has accused banks of behaving like “modern-day Dick Turpins” over the ongoing payment protection insurance (PPI) scandal.
The 70-year-old, from Yateley, unwittingly had PPI on four separate loans of between £5,000 and £7,000 taken out over several years with Alliance & Leicester and Santander.
When he applied for a PPI refund several years ago he was refused.
He has now signed up to the new group legal action by law firm Harcus Parker which aims to return billions of pounds in secret PPI commission.
The group claim opens up a new avenue to claim for those who, like Mr Pharo, have had previous claims turned down, have never previously claimed, or who have received only partial compensation in the past.
“I never knew anything about the high commissions they took,” he said. “It’s like highway robbery – they’re behaving like modern-day Dick Turpins.
“Any compensation I could get now would be very welcome – maybe I’d be able to have a holiday.”
‘It’s absolutely criminal’
A retired Folkestone businessman has slammed “wicked” banks for charging undeclared commission of up to 95% on payment protection insurance (PPI) cover.
Colin Timms, 80, has signed up to a group legal action to recover the full commission they were charged but never told about.
Mr Timms, who ran farming, transport and cold storage businesses, has previously claimed compensation for multiple PPI policies on a range of credit cards held over many years.
In many cases, he didn’t even know he was being charged PPI on his monthly repayments.
“You thought all you were paying was interest – but no, you were taking on their PPI,” he said.
“They should not have been doing it because I didn’t need it. I had assets that would have covered anything I needed to cover.”
And now he believes the banks “need to be taken to task” over the high commissions he was also never told about.
“They got exposed for mis-selling – and now it’s just led to another scandal, and this is a wicked scandal,” he said.
“It now seems even the settlement I received may have been wrong, because they were charging an excess of commission and didn’t repay all of it. The commission is just not realistic is it?
“I think it’s more than scandalous, I think it’s absolutely criminal.”
Anyone who thinks they are still owed cash from PPI can check if they are owed cash and join the claim here.
This could include if you think you were mis-sold PPI but never made a claim for a refund, or did so but were not handed a payout.
Those who did get a refund could also make a claim if not all the commission was refunded.
What are class action lawsuits?
Lawsuits that result in compensation for many people are often referred to as “class action”.
In England and Wales, a Group Litigation Order (GLO) is often used for this kind of lawsuit.
Collective action has been made easier under the UK’s Consumer Rights Act 2015.
It means the courts can treat similar claims as one, rather than having hundreds or even thousands of separate individual claims.
There are a number of stages to bringing this kind of lawsuit, including the courts needing to give permission for a GLO.
Both sides can also appeal decisions at various stages making it a lengthy process with no guarantee of a payout.
Collective actions are rare – there have only been around 100 cases since 2000 according to the HM Courts and Tribunals Service.
The Mastercard case was the first of these big claims since the changes in 2015 and is the furthest along – but it first launched in 2017 and is still in the courts.
Lawyers have urged Brits to join several other collective claims for compensation in recent years.
There is no cost to sign up, but the firm will usually take a cut of any payout if the claim is successful to cover legal costs and that can be as much as 30%.
There’s no guarantee of a payout and collective claims of this type have not yet been fully tested in court.
None have yet been given permission to go ahead as a collective action apart from the Mastercard claim.
