The 2014 Plevin v Paragon Personal Finance case made it viable for consumers to claim compensation against PPI providers if a hidden commission was present at the time of the sale. The ruling stated that anything above a 50% commission was deemed an “unfair relationship” between the lender and the consumer under the Consumer Credit Act 1974.
The FCA then published guidance about these claims which detailed that consumers could seek compensation for anything over the 50% commission, or the “tipping point”.
However, a 2018 County Court ruling in Manchester may have bolstered consumers’ claims even more. In Doran v Paragon Personal Finance, the court ruled that Mr and Mrs Doran were entitled to the full amount of the PPI commission and any associated interest payments on the basis that, had they known about the commission, they would not have entered into the agreement.
Below, we explain exactly what happened in the Doran case, what the original Plevin case was, and what you can do if you think you have a claim for compensation.
What is a Plevin PPI Claim?
To talk about Doran, we first need to explain the Plevin v Paragon Personal Finance case which happened a few years prior. A Plevin PPI claim stems from on a Supreme Court case from 12th November 2014, and is centred around secret PPI commission. Mrs Susan Plevin was sold a PPI policy to cover her secured loan from Paragon Personal Finance Ltd. Through diligent examining of the terms and conditions, Mrs Levin discovered that an incredible 71.8% of the PPI premiums she had paid under the policy were in fact a hidden commission to the lender. Plevin and her legal team put to the court that this was unfair.
The Supreme Court agreed, and stated that the sale of the PPI policy was unfair due to:
- Non-disclosure of the commission payment; and
- The percentage of the PPI premium that was paid as commission.
This case then set precedent for future cases. The FCA has since ruled that if anyone else wishes to bring a PPI claim about the high levels of hidden commission within PPI premiums, they could do so.
What is different about the Doran case?
The main difference between the two cases is the amount of compensation claimed back. In 2004, Mr and Mrs Doran borrowed a lump sum of £40,500 under a fixed-term credit agreement. £30,000 of this was for a personal loan, with the remaining £10,500 being a PPI premium.
The PPI insurance company paid Paragon Personal Finance an incredible £7,985 in commission and profit share, which totalled 76% of the premium.
District Judge Pearson decided that the Doran’s would not have taken out the PPI policy at all had they known about the amount of commission that was being offered. He stated:
Without disclosure of the level of commission, the person in the position of the Claimants has simply no way of knowing that most of the money which they think they are paying to obtain the benefit of a PPI policy is in fact going to the lender.
The Judge then ruled that the Doran’s be paid the FULL amount of the 76% commission, as opposed the FCA’s guidance of the “tipping point” of anything above 50%. They were awarded all of the commission plus interest for the policy, a total of £17,345.
The judgement was significant in that it showed that the unfairness of the PPI hidden commission cases related to matters that took place at the time of entering into the agreement. It took into account whether the customer would have purchased PPI had they known about the hidden commission in the first place.
Are Doran/Plevin cases different to the usual mis-sold PPI cases?
Yes, there a few differences to the two claims. Both are made in relation to the sale of PPI premiums, but a Doran/Plevin case does not consider whether the PPI policy was mis-sold. Instead, this type of case focusses on the secret commission that was paid at the time of the sale, that lenders failed to disclose. This hidden commission could be paid to brokers who brough customers to banks.
This distinction actually means that even if it was deemed you were not mis-sold PPI, you may still be eligible to claim compensation. If you have had a PPI claim rejected, you might still be affected by Plevin.
Can I still claim after the PPI Deadline?
Yes. Because the two types of claims are completely different, the 2019 PPI deadline does not apply to Doran/Plevin cases. In fact, there is no deadline at all. This is down to the fact that the claim itself is centred around a different area of law – The Consumer Credit Act 1974.
Am I eligible to claim hidden commission from my PPI?
If the below applies to you, you may be eligible to claim:
- Your PPI policy was sold before 6 April 2007 and open after 6 April 2008; or
- Your PPI policy was sold after 6 April 2007 (whether or not it was still open after 6 April 2008);
- You have not previously complained about Mis-sold PPI;
- You have had a PPI Claim rejected; or
- You had a refund for the “Plevin only” part of your PPI (also known as a “tipping point offer”)
The original Plevin ruling means that if more than 50% of your PPI’s cost went to hidden commission to the lender, or the lender and the broker combined, and it was not sufficiently explained to you, you are due compensation. The Doran ruling means that you may be eligible for ALL of the commission.
This means if you were sold PPI, it is more than likely you have a claim, as an average of 67% of what customers paid for PPI premiums was attributed to commissions from insurers. Banks invariably failed to mention the commission.
How can I start my secret commission PPI claim?
ClaimExperts panel of solicitors make starting your PPI hidden commission claim easy. We have a panel of experts who are on hand to talk you through the process. There is no obligation to use their service after they have performed our initial checks, and none of the checks will affect your credit score.
If you are one of the thousands in the UK that might have been affected by the undisclosed PPI commission scandal, contact one of the ClaimExperts panel today and they will be in touch to talk you through the next steps.
There are no upfront costs, and any payments to us will simply be deducted from your compensation award should your claim be successful.
How can Claim Experts help?
Have you been a victim of hidden PPI commission mis-selling? If you were subject to secret fees from your PPI broker and/or bank, you may be entitled to compensation. The ClaimExperts panel of experts can guide you through any potential claim, and they work on a No Win, No Fee basis, so there is no risk to you.
Our legal panel come from a financial services and compliance background. They have experience in bringing successful claims against those who mis-sell financial products.
Plevin v Paragon Personal Finance Limited Ruling – https://www.supremecourt.uk/cases/docs/uksc-2014-0037-judgment.pdf
Britain’s Paragon will not appeal landmark Doran PPI case ruling – https://www.thisismoney.co.uk/wires/reuters/article-6368185/Britains-Paragon-says-not-appeal-landmark-PPI-case-ruling.html