New wave of PPI Claims

Jonny74

Interesting stories out today and yesterday about a new wave of PPI claims.
Seems banks are trying to financially strangle them.

Jonny74

Also a piece in today’s Daily Mail but I can’t post the link for some reason. 

-taff

They're talking about Plevin payouts. Only available on finance between a certain period and does not apply to any previously successful complaint.

• you took out the credit the PPI was sold with (for example, a loan or credit card) on or after 6 April 2007
• you took out the credit the PPI was sold with before 6 April 2007, and it was still running on or after 6 April 2008

dunstonh

Unfortunately, the articles suggest some big widespread payouts but that will not be the case.
1 - It only applies to rejected complaints (as successful ones have had 100% paid out already - nothing more to pay)
2 - It only applies to PPI that is taken in conjunction with a debt regulated under the consumer credit act.  The Plevin ruling relies on changes to the consumer credit act 2006.   So, a debt repaid before that act was effective would not be captured by it.   Most mortgages were not captured by the CCA either (although some were but MPPI has low commission)
3 - if you have already had a Plevin payout then you had had the excess over 50% already.   This is an attempted second bite of the cherry to get a bit some or all of the amount under 50%

Both successful cases are being appealed.

Jonny74

I’m not sure it’s a ‘second bite of the cherry’.
If the banks took secret commissions they should have been automatically forced to pay that back.
Outrageous that FCA only told them to pay back anything over 50 per cent of a hidden commission.
 No one would have bought PPI, even if they needed it, if they’d known banks got up to NINETY FIVE PER CENT commission.

dunstonh

If the banks took secret commissions they should have been automatically forced to pay that back.

Do you ask Tesco to pay back the "commission" they make on a tin of beans?

The commissions were not required in law to be discussed until a change in 2006 in the consumer credit act that nobody noticed.

Outrageous that FCA only told them to pay back anything over 50 per cent of a hidden commission.

Providers should be expected to earn something from the policies sold.   The FCA considered a cap of 50% was suitable.  Especially when risk sharing was taking place with the insurers.  

No one would have bought PPI, even if they needed it, if they’d known banks got up to NINETY FIVE PER CENT commission.

First of all, it's rare for 95% to go to the seller.   That was mainly on high risk secured lending (the types that used to be common on daytime tv).     The banks tended to be closer to 70% on loans and 50% on credit card and 30% on MPPI.    

Jonny74

Are you honestly saying that you think it’s fair that the banks took a 70 per cent hidden commission on a product (which was useless for millions of customers)?

The FCA may have said that a fifty per
cent hidden fee was okay but the courts ruled it wasn’t. I wouldn’t say the FCA has a very good track record when it comes to siding with customers over banks.

You can’t compare selling PPI with a tin of beans. Clearly, if a tin of beans had that much mark up competitors would reduce their profit to get more customers. Banks didn’t do this because it wasn’t a truly competitive product. It was just a rip-off.

Seems strange you’re so keen to defend what has been recognised in the courts as malpractice. 

dunstonh

Are you honestly saying that you think it’s fair that the banks took a 70 per cent hidden commission on a product (which was useless for millions of customers)?

No I am not.  

The FCA may have said that a fifty per
cent hidden fee was okay but the courts ruled it wasn’t. I wouldn’t say the FCA has a very good track record when it comes to siding with customers over banks.

it hasn't done a good job siding with the banks either.

You can’t compare selling PPI with a tin of beans. Clearly, if a tin of beans had that much mark up competitors would reduce their profit to get more customers. Banks didn’t do this because it wasn’t a truly competitive product. It was just a rip-off.

Yes you can as 

a) there are products with big markups on the retail market in many walks of life. Clothing for example.  Mobile phones have a circa 50% mark up. 

b) the price was on the PPI just as the price is on products.  People generally buy on price.  Not on the commission/mark up the retailer has.   

Seems strange you’re so keen to defend what has been recognised in the courts as malpractice. 

Who says I am defending it?   it is possible to see arguments on both sides.

It was overpriced at the banks (but not via the whole of market distribution where the commission was typically around 25%).  Bank products are nearly always more expensive than whole of market offerings.

However, the banks took on the risk-sharing with the insurers.  So, when it came to claims, the banks were also paying out on those.   It was a profit sharing/loss sharing product.  So, you would expect a greater margin going to the banks.   So, in that respect, they were hard done by as that is not a commission but the manufacturer mark up.  However, it got classified as commission.

-taff

Jonny74 said:

I’m not sure it’s a ‘second bite of the cherry’.
If the banks took secret commissions they should have been automatically forced to pay that back.
Outrageous that FCA only told them to pay back anything over 50 per cent of a hidden commission.
 No one would have bought PPI, even if they needed it, if they’d known banks got up to NINETY FIVE PER CENT commission.

Well, if you keep expecting bnks to be some big cuddly teddy bear that's just there to make you feel safe and warm you'e fogetting that they are a business, in the business of making money , so they they have to make a profit. Every business is allowed to make a profit and that was one of the ways they did.

And saying that does not mean I agree with it. You get factual info here, not handholding outrage.

Jonny74

Like the courts and regulators, I don’t expect them to mis-sell useless products and charges extortionate hidden fees.

They’ve behaved appalling for years and no one has  been properly held to account. They systematically destroyed viable businesses through GRG and BSU but still fail to take responsibility.

Anyway, let’s agree to disagree and I wish you well.

-taff

I told you a fact. It is independent of you agreeing or disagreeing. Banks are there to make money, BSU and GRG have nothing to do with PPI. If you're here to rant about banks in general, have at it. Or post on the banking forum where they'll give you a rip roaring argument.