Plevin: the shape of things to come?

The FCA recently issued a progress report on its work in relation to the PPI complaints deadline.  Included within the report was an update on the processing of the so called, “Plevin cases”.  In this article we look more closely at the FCA’s update in this specific area of PPI claims and consider the impact on the claims environment of recent events, looking at what the next 9 months might hold, as we count down to the time bar date.

So, what’s in the report?

The FCA’s rules and guidance on the “fair handling of PPI complaints in light of Plevin” were part of the package of measures launched on 29 August 2017.  These included the requirement for firms to write to previously rejected mis-selling complainants to explain that they could claim again under the Plevin ruling.

The FCA report that firms have identified previously rejected mis-selling complainants and completed their mailings on time.  The response rate at 40% has been in line with expectations.

Overall, their follow up work led the FCA to state in the report, in relation to the Plevin cases, “we satisfied ourselves that firms’ approaches were reasonable and evidenced.”  So, from the FCA perspective, so far, so good.

What’s all the fuss about the Doran case? Is Doran the new Plevin? 

Plevin has been with us for some time.  The court case was back in 2014 and has given us the name of the specific type of claim that can be made relating to the unfair contract arrangements brought about by the high levels of undisclosed commission typically paid to the sellers of such cases.

Doran is a more recent and generally less well known Plevin-type claim case, also involving Paragon Personal Finance.  Could Paragon’s decision not to appeal the court judgement potentially have far reaching consequences for PPI claimants and the wider claims eco-system – or maybe not?  Firstly, a quick recap of the who, what and why.

Christopher and Joanne Doran, took Paragon to court claiming they were unaware that 76% of the PPI premium they had paid, had gone to the broker as commission. The judge agreed in their favour, ruling that the Dorans would not have bought the policy had the broker disclosed the level of commission paid.  As a result, Paragon were ordered to pay the Dorans the full amount of commission paid to the broker.  This decision therefore did not follow the FCA “tipping point” guidance for such payments, which states that commission over 50% is unfair and should be paid back to customers.

The Dorans stood to receive £7,985 of the £10,500 PPI premium they had paid.  As the judgement went against the FCA guidance, Paragon stated very clearly that they would appeal.

However, as already stated, Paragon, unlike in their 2014 Plevin court case, have now decided not to appeal the decision.

There are a number of schools of thought surrounding this decision, with some publications reporting that the decision followed discussions with “senior sources at several major UK lenders”, which was vehemently denied by Paragon.

Whatever the inner wrangling at Paragon and whether externally influenced or not, the outcome is that Paragon are not appealing the decision.  This is an important decision, as it means that the case will not go to the Supreme Court (as the Plevin case did) where any decision would set a legal precedent.

However, it should be noted that the Judge Pearson who presided over the Doran case, is a senior judge, leading to some speculation in the marketplace that there is an element of precedent established by the decision.  Time, and maybe another court case or two, will tell.

So, does Doran change the Plevin claim game?

Well, whilst Mr & Mrs Doran are £7,985 (less costs) better off, the Manchester Court decision is not binding on any other court and doesn’t set a legal precedent.  It will of course be interesting to see how the case is used, should another similar case make it to court.

How have the various parties in the claims eco-system reacted to the outcome of the Doran case?

The FCA has said that it will not be changing any aspect of its guidance to the industry following the Manchester Court decision.  So, it’s as you were from the FCA.

Lenders may well, if only in whispered tones, be pleased with Paragon’s decision not to appeal and take the Doran case to the Supreme Court.  The industry in general had received a clean bill of health in terms of its processing of Plevin claims from the FCA’s interim report; from their perspective it will be business as usual in terms of resolving the Plevin claims they receive.

The decision also appears to have had no negative impact on the language, actions or intent of the larger Claims Management firms (and their legal divisions) who are out banging the PPI drum, through all methods and means, and who collectively plan to submit increasing numbers of Plevin claims and DSAR requests in the coming months.

Consumer friendly groups such as Money Saving Expert, have reported on the Doran case however there is no change to their message of encouraging consumers to claim, based on the FCA guidelines.

What should be on firms’ Plevin agenda?

As we move into 2019 the countdown to 29 August 2019, is no longer something that happens “next year”.  We can expect the number of claims to continue to escalate through to the deadline day as the FCA’s campaign continues through 2019, alongside the CMC’s and consumer groups’ efforts.

PPI complaint numbers in H1 2018 rose by 11% (compared to H2 2017) to 1.72 million, amounting to the highest level of complaints about PPI for more than four years, which based on the FCA’s report would have included a significant proportion of Plevin claims.

As the various awareness campaigns (FCA and CMC) reaches those previously unaware (yes there are still many in that group) and provokes even the most ambivalent and reticent consumer to, at the very least, submit a Data Subject Access Requests (DSAR), firms will need to ever more vigilant and focused on monitoring complaint activity and capacity planning as the expected spikes in volumes may hit in the first few months of 2019.

The impact within that complaint activity of Plevin cases is yet to be seen, but there is sufficient evidence to suggest that there is still significant activity, and maybe a court case or two, yet to come.