Millions could be owed £2,500 as new legal bid for PPI compensation is launched
Millions of Brits could be owed around £2,500 in cash in the wake of a new legal case for personal protection insurance (PPI) compensation being launched.
The legal claim, made by law firm Harcus Parker last month, accuses banks of unfairly charging £18billion worth of commission on PPI sales, and not refunding this in their previous compensation claims. In some cases, it's believed lenders charged up to 80% commission on PPI sales.
The county court application for the case was filed at Birmingham County Court on behalf of around 2,500 claimants against eight financial institutions including Lloyds Bank, Barclays, HSBC and Santander.
Harcus Parker says that around 350,000 people have applied to join the "no win, no fee" group legal action in total, but around six million people could've been impacted and can join the case. The law firm estimates that the average payout for individuals joining the suit could be around £2,500 if the legal action is successful.
The legal battle marks a new episode in the PPI scandal. PPI was an insurance policy attached to credit agreements such as loans, mortgages or credit cards. People were told PPI would cover their debt payments if they died, became ill or disabled, lost their job or were left unable to repay debt for another reason. However, high numbers of PPI were mis-sold to customers who could never claim it due to their policy's exclusions.
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Between 2011 and 2019, banks repaid customers more than £38billion in compensation for mis-sold PPI.
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The deadline for claiming mis-sold PPI was on August 29 2019. This was set by the financial regulator the Financial Conduct Authority (FCA). However, the new legal action from Harcus Parker is not claimed under the grounds of mis-selling.
Instead, the legal firm is arguing that banks and credit card companies took huge commissions when they sold the insurance and failed to disclose this. Harcus Parker explains that if someone paid £100 for their PPI claim, only £20 went on the policy itself and around £80 went on the commissions payment to the bank or credit card supplier.
Damon Parker, a partner at Harcus Parker, commented: "For years, banks and credit card companies have found ways to avoid telling customers the whole truth about the commissions they paid themselves. This failure to come clean about the scandal is a stain on the industry and needs to be redressed through settlement or legal means.
"I urge anyone who thinks they may have a claim to fill out the very simple form on our claims website to see if they are eligible."
The law firm says that you are likely to be able to join the claim if you live in England or Wales, have had PPI but never previously made a claim, have made a claim but had it rejected or if you have been paid back only the portion of the commission you paid above 50% of your premium.
You can find the form on Harcus Parker's official website for the PPI legal claim here. To join, you will need to provide the name of your lender, your name, age and email address, and Harcus Parker will get information about your policy, including when you bought it and how much you paid.
If you are thinking of joining the case, you should be aware that at this stage there is no guarantee the legal claim will actually be allowed to proceed. This first has to be decided by a senior judge.
If the case is successful, the claim could take a significant amount of time to be completed - potentially years.
New PPI lawsuit could pay up to £18billion over 'outrageous' insurance scandal
You do not need to pay anything upfront to join the lawsuit however, if Harcus Parker wins, the payout you will get will be minus the firm's 35% fee plus 20% VAT on top. If the lenders settle before the case goes to course, your payout will be minus a 20% fee, plus 20% VAT.
As the case is a "no win no fee" - if Harcus Parker loses then you should not end up owing the law firm money. Harcus Parker says they will be fully insured if that ends up being the case. Although, like with any legal proceedings, it can come with risk so you should educate yourself on the pros and cons of signing up before doing so.
On behalf of the lenders in the case, UK Finance said: "Firms will review and respond to any claims made in legal proceedings as required."
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