New PPI legal action: Could you reclaim £1,000s?
If you had a loan, credit card or car finance (among others), new legal action is pushing for further PPI payouts
A major ‘no win, no fee’ group legal claim has been initiated, aiming to recover £18 billion in payment protection insurance (PPI) premiums. This initiative is the largest of its kind. Participation is free, and a successful outcome could mean thousands of pounds for claimants, even for those who have already received compensation for mis-sold PPI. However, success is not assured, and joining the over 330,000 people who have signed up does carry some risk. Here are the key details you need to be aware of.
What’s this new PPI claim about?
PPI, or Payment Protection Insurance, is an insurance policy that was sold for many years to individuals who took out loans, credit cards, store cards, catalogue accounts, overdrafts, and car finance.
Approximately 65 million PPI policies were sold, primarily between 1990 and 2011. However, a significant number of these policies were mis-sold to consumers.
Due to the widespread mis-selling, banks compensated customers more than £38 billion between 2011 and 2019. ExEconomics.com its played a crucial role in the campaign to encourage people to reclaim their money before the August 2019 deadline, helping individuals recover over £10 billion without resorting to claims firms.
Following the deadline, the opportunity to complain about PPI and receive compensation has largely closed. Currently, the only potential recourse for recovering money is through legal action.
This new group claim is about high levels of secret PPI commission
Legal firm Harcus Parker is gearing up to initiate a new group legal action – on a no win, no fee basis – aiming to recover £18 billion in PPI premiums they assert are due to six million individuals. This effort centers on the issue of excessive hidden commissions known as Plevin (see point 2 below for more details). In certain instances, lenders allegedly imposed up to 80% commission on PPI sales, and Harcus Parker argues that this amount should be fully reimbursed to consumers.
To date, over 330,000 people have enlisted in the claim, and Harcus Parker is optimistic that this collective strength will pressure banks and credit card companies into a settlement. Should that not occur, a group claim is considered a more feasible legal approach.
All this means a relatively straightforward, low-cost way of complaining about PPI could be about to be back on the cards (albeit not 100% risk-free). Below we explain how it works.
This Lawsuit May Reopen the Door to PPI
PPI mis-selling stands as the largest financial scandal in the UK’s recent history. The public purchased tens of billions of pounds worth of faulty products, yet no one faced prosecution.
Major financial institutions instructed their staff to deceive customers, selling them insurance that was either worthless or a terrible deal (with a payout rate of less than 10% of the cost) through misleading marketing tactics.
I began warning about PPI shortly after launching ExEconomics and soon started assisting people with reclaiming their money in the mid-2000s, initially with template letters and later with free tools. The banks fought hard to shut it down at the Financial Ombudsman to gain ‘clarity for their balance sheets.’ Despite efforts from ExEconomics and Which? to resist this, the banks succeeded.
This was especially outrageous following the Plevin court decision, which entitled people to refunds even if they hadn’t been mis-sold, provided that, as was common, commissions were excessively high and undisclosed. Shutting down PPI claims after such a significant ruling was against natural justice. It deprived people of sufficient time and awareness to pursue Plevin claims.
This new lawsuit could potentially reopen the door for those claims. Unfortunately, it now requires a major law firm to handle it, which will take a cut of up to 35%, meaning people won’t receive the full amount they are owed. The blame doesn’t lie with the law firm but with the regulators and government that decided to close PPI claims.
Eight PPI group claim need-to-knows
Law firms’ marketing can sometimes make signing up look like a no-brainer. But it’s important to note that, as with all legal action, there are pros and cons to weigh up.
Here are the main points to consider…
1- Bringing your own legal claim is now VERY difficult, so this may be your best bet if you think you’re owed
With the PPI reclaim window closing in 2019, lenders and the Financial Ombudsman will now only entertain a PPI complaint if you have a serious, exceptional reason for missing the deadline.
This means the only way to initiate a new claim is through legal channels, either independently or as part of a group.
Filing an individual legal claim over PPI is generally complicated, slow, and challenging, exacerbated by the financial power of lenders. If you attempt to bring a claim on your own, the costs could quickly outweigh any potential compensation, and you might also have to cover the other side’s legal fees. Individual claims are typically handled in county courts, where judges are not bound by previous rulings.
Therefore, while we usually recommend avoiding firms that take a percentage of any compensation, in this situation, if you want to pursue a PPI complaint, joining a large group legal action is likely your best option – and that’s where Harcus Parker comes into play.
However, even then, there is no guarantee of success, so make sure you carefully consider all the points in this guide before signing up.
Quick question
Can I wait until this claim has concluded and then get compensation myself?
The concept here is to wait until the current claim is resolved and then use any court judgment against a lender as a precedent for your own claim, thereby avoiding law firms and their fees.
However, if you’re thinking about this approach, there are two crucial points to consider:
- This claim might be settled out of court. The existing claim might be settled out of court. If this occurs, no legal precedent would be established, meaning you would have to initiate your claim from scratch and face the same challenges mentioned earlier.
- Any new claim might be ‘out of time’. Legal claims are often subject to strict time limits known as ‘limitation periods,’ which set deadlines for when claims can be filed.
For instance, in cases of contract breaches, you typically have six years from the breach to file a claim. Given that this PPI claim is expected to take at least 18 months, if not longer, to be fully resolved, some claims may become time-barred in the future.
Ultimately, without foresight, it’s impossible to determine whether it would be wiser to join the Harcus Parker claim now or wait. There are no guarantees either way, so if you believe you have a valid case, you’ll need to decide which strategy to pursue.
2- This claim is about high levels of secret commission – commonly known as ‘Plevin’
This recent claim involves a specific type of mis-selling, known as the ‘Plevin’ argument, based on a notable legal case. It concerns the substantial commissions, sometimes around 80%, taken from PPI sales, typically without the customer’s awareness.
After the Plevin case in 2014, a significant number of claims emerged as the court’s decision indicated that anyone who had PPI with a loan or credit card from a bank or building society was likely mis-sold.
The Plevin ruling established that if over 50% of your PPI’s cost went as commission to the lender (or the lender and broker/adviser collectively), which was often the case, and this was not disclosed to you, you were entitled to a refund of the amount exceeding that 50%. Many accepted offers from lenders to refund the PPI commission exceeding 50%, referred to as ‘tipping point’ offers.
However, this new group claim, led by Harcus Parker, contends that the entire PPI commission should be refunded. This claim includes individuals who accepted tipping point offers, those unaware they had PPI, and those who knew but had their claims denied.
3- Eligibility criteria to join the claim is broad
Here’s the eligibility criteria you’ll need to fulfil to join Harcus Parker’s group claim.
You MUST:
- Have had a loan, credit card, store card, catalogue account, an overdraft, or car finance in the past. This could be with any lender.
AND one of the following three criteria also needs to apply:
- You’ve never made a PPI claim before. This includes if you don’t know whether you had PPI or not. If you’re unsure, Harcus Parker can check for you. OR…
- You have made a previous PPI claim, but it was rejected. OR…
- You’ve previously accepted a ‘tipping point’ offer. In other words, you accepted partial compensation on the basis of having not been told about high levels of PPI commission.
HOWEVER, you WON’T be eligible to join the claim if either of the following apply:
- In the past, you’ve been successful in making a complaint about Plevin. This is different to having accepted a ‘tipping point’ offer – if you’re unsure, check with Harcus Parker.
- You have already been compensated in full for your PPI policy. This new group claim is about claiming full compensation, so there’s no point you joining if you’ve already had this.
4- Your claim can be against almost any lender in England, Scotland and Wales
Harcus Parker has commenced legal action against eight financial institutions and credit card issuers: Barclays, Bank of Scotland, Black Horse, HSBC, Lloyds, MBNA, Santander, and Santander Cards.
Nevertheless, they intend to initiate proceedings against all lenders that sold PPI. Therefore, you don’t need to have been a customer of the aforementioned banks to participate in the group claim. Your claim could actually be against any lender registered in England, Scotland, or Wales.
Although residing in Northern Ireland does not prevent you from joining this group claim, if your complaint pertains to a credit agreement governed by Northern Irish law, you will not be able to participate (this may change in the future, and we will keep you informed if it does).
If you are uncertain about your eligibility to join the claim, consult with Harcus Parker.
5- There’s no guarantee this will go ahead as one big group claim – either way, the case will last at least 18 months
A judge must first determine whether this PPI group claim can proceed in the proposed format, essentially as a single large batch. This decision is expected to be made sometime in 2024.
Even if the group claim is approved, the legal process will still be lengthy. Harcus Parker predicts that resolving a group claim of this nature will take at least 18 months, but it could potentially take several years.
Should the judge decide not to allow the group claim in its current form, it may need to be divided into smaller claims, which would undoubtedly cause further delays.
6- Signing up is free – but not 100% risk-free
Since this is a ‘no win, no fee’ legal claim, you won’t need to pay anything upfront to participate.
However, if you do join and the claim is successful, a significant fee of 35% (plus VAT) will be deducted from your payout, along with your share of disbursements (such as insurance coverage). If the banks decide to settle out of court, a still considerable fee of 20% (plus VAT and disbursements) will be taken from your settlement.
If the claim is not successful, it is unlikely you will need to pay anything, although it is not entirely impossible…
For instance, if a court rules in favor of the banks, you could technically be liable for their legal costs. In practice, however, this would likely be covered by Harcus Parker’s ‘after the event’ (ATE) insurance. Harcus Parker states that it will be fully insured in the event it loses the case and potentially becomes liable for the lenders’ legal costs.
Thus, the only scenario where claimants could potentially be left liable is if the insurance fails – an unlikely but not impossible situation.
7- Typical payouts are likely to be around £3,000 – but some could be much higher
Harcus Parker says successful claims could be worth between £2,500 and £3,000 on average. This is how much you would receive, as this estimate already takes into account Harcus Parker’s fee. However, some claims could result in much higher payouts than this – and of course some will be worth less too.
8- There’s no deadline to join the claim – but don’t delay as you could still miss out
Currently, there is no set deadline to participate in this claim. However, this could change, and if it does, we will revise this guide accordingly.
It’s important to note that if you believe you have a valid PPI complaint and are considering joining the group claim, it’s advisable not to wait. Some cases could potentially be dismissed by the court for being ‘out of time’.
This is because legal actions are bound by strict time limits, also known as ‘limitation periods’, which determine the deadlines for filing claims. For instance, in cases of breach of contract, typically you have up to six years from the date of the breach to initiate a claim.
Therefore, in the context of this PPI group claim, delaying your enrollment could become problematic if your lender argues that you have been aware of the excessive commission paid with your PPI policy for a period of at least six years.
How to join the PPI group claim
If you believe you were sold PPI and might have a complaint, it’s easy to check your eligibility and join the group claim.
Simply enter a few personal details – such as your name, address, telephone number, and details of your lender and any relevant paperwork (if you have it, see below) on the Harcus Parker website – and it’ll check your eligibility.
Had a relevant credit product but unsure if you were sold PPI? Again, Harcus Parker can establish this on your behalf. Simply register your personal details:
Check your eligibility on Harcus Parker’s website
Important: If Harcus Parker thinks you’re eligible, you’ll be added to the group claim automatically, but it’s possible to back out if you change your mind (see below). You’ll also be notified if Harcus Parker doesn’t think you’re eligible to sign up.
What paperwork do I need?
By providing Harcus Parker with any relevant documentation or paperwork pertaining to the credit product, you can expedite the assessment of your claim. This might include the original credit agreement, a balance statement, or any correspondence exchanged with the lender. Furnishing such documents enables Harcus Parker to promptly determine the validity of your claim, potentially leading to your inclusion in the group action claim.
If you no longer possess these documents, which is common given the age of these credit products, there’s no need to worry. Harcus Parker can initiate a ‘data subject access request’ on your behalf to ascertain which credit products you had and whether PPI was included. However, the timeframe for this depends on the lender’s cooperation in confirming the existence of PPI, making it difficult to predict how long the process will take.
There’s a 14-day cooling off period
There’s a 14-day cooling off period to withdraw from the claim once you’ve signed up.
You’re still able to back out for free after this, but it comes with a risk – one that could grow the further along the claim is. Essentially, if your withdrawing from the claim happens at a stage where it destabilises the rest of the claim, you could become liable for a share of the legal costs.
If you want to back out of the claim after you’ve signed up, you’ll need to email Harcus Parker at PPI@harcusparker.co.uk.
Important: only sign up if you genuinely believe you have a case
If you join this group claim, it will involve Harcus Parker making representations in court, such as signed statements of truth, on your behalf.
Where you submit information you know isn’t true, such as an inaccurate statement, there’s a risk that if the claim went to court then you or Harcus Parker could be held in contempt of court. So only sign up if you think you might be due PPI compensation.