New regulations would mean devastating problems for the UK banking industry if the UK Supreme Court and the Financial Conduct Authority consider the implementation of new rules stemming from the Susan Plevin and Paragon Personal Finance case.
The case indicated that Plevin was due compensation for a PPI that she could legitimately use because lender and brokers failed to declare their commission or lacked transparency in the manner.
Banks, still reeling from millions to billions worth of additional PPI compensation per quarter, now have a total of £27 billion following Lloyds’ announcement of a £1.7 billion additional commission for PPI claims.
According to thinktank Autonomous Research, the industry faces a much larger bill than anticipated:
“In essence this ruling appears to open up a new angle for PPI mis-selling claims, based on commission payment (as opposed to the PPI policy),” Autonomous Research said.
“If applied to other products (e.g. store cards and auto finance), this case could lead to a whole new wave of consumer claims for the UK banks, with a bill which could be even higher than the current PPI tally,” it said.
The FCA had confirmed carrying out its own review of the PPI complaints handling processes and the impact of the court ruling. Meanwhile, banks and financial analysts await the FCA’s position on the Plevin case.