UK’s banking industry is fearing a huge backlash of payment protection insurance complaints as the Financial Conduct Authority closes in on its final decision to include the Plevin V. Paragon Personal Finance verdict to current payment protection insurance claims regulations.
The UK Supreme Court ruled in favour of Susan Plevin after Paragon Personal Finance did not inform her that it took 70% of the commission on her PPI contract. The Supreme Court moved to say that the large commission breached the Consumer Credit Act because the amount was not disclosed to Plevin. The FCA is still investigating whether similar PPI cases should be fully recompensed by banks.
UK banks, battered by endless numbers of payment protection insurance claims, claims management companies and billions of profit lost to PPI claims, will continue to pay more than £26 billion, the total recompensed by the UK banking industry so far.
The Plevin case could bring the total to £33 billion, according to financial think-tank Autonomous research. An anonymous senior official from a high-street bank said the FCA may go for the “destructive” option for applying the ruling to all financial products where commission was not disclosed.
The Senior Banker said that “once you open the doors for this, it could be apocalyptic.”