Received a Plevin Offer? Read this…

Recently we have seen a surge in the number of Consumers receiving Plevin type offers from their Lenders. On the face of it, this seems like great news with many people receiving such offers having had their PPI mis-sale complaint rejected previously. But what actually is a Plevin Claim?

Here we outline a few facts that all consumers should be aware of before accepting a Plevin Offer.

“Plevin Claims” as they are now commonly known are not PPI Mis-Sale Claims. They are focused on the amount of commission a Lender received for selling the policy rather than whether or not the policy was mis-sold. Staggeringly, there have been many cases seen where the amount of commission was over 80% of the PPI Premium. The average being just under 70%.

To put a number on that, if a consumer was sold a PPI Policy for £1,000 then, on average, the Lender who sold it would have received a £670 commission!

They are based on a precedent set in the Supreme Court Case: Plevin v Paragon Personal Finance Limited where the following was ruled:

“that the non-disclosure of the amount of the commissions made Paragon’s relationship with Mrs Plevin unfair is enough to justify the reopening of the transaction under section 140A”

The key here is the non-disclosure. Had the consumer known that the lender was receiving such a high amount of commission for selling the policy, it would have made them question the actual value of that policy before agreeing to purchase it. Likewise, you wouldn’t buy a car if you knew the salesmen was receiving a 70% commission, would you?

So, Lenders are making Plevin Offers. Great News! ….. Not quite.

Lender Plevin Offers

Many Lenders are following the guidance set out by the FCA, which forces them to reconsider PPI Claims that have been rejected on a Mis-Sale Complaint – on the new grounds set out by the Plevin ruling. However, the FCA has also introduced a 50% tipping point, meaning that the Lenders should refund the difference between 50% of the premium and the amount of commission taken. Again, to put that into numbers:

• £1,000 PPI Policy
• 70% Commission at £700
• Difference between commission and tipping point = £200

In the example above, the Plevin Offer being made by a Lender represents just 20% of the overall premium (which would be paid plus interest).

The main difference here is that in the Plevin case itself, the consumer was awarded the FULL premium as a refund, plus interest. The introduction of a ‘tipping point’ is seen as a light touch by the FCA and heavily in favour of Lenders. But what other options are there for consumers?

Consumer Options

Anyone in receipt of a Plevin Offer could just simply accept it. However, they should certainly be aware that by accepting the offer it will most likely be in full and final settlement of the complaint. This means that it can never be re-opened; and that the amount of compensation they receive will be around 20-25% of what they could have achieved.

For those that don’t want to under settle – there is another option. A few specialised Law Firms are now able to run these Plevin Claims and achieve much closer to the full premium in compensation. This is done by using the precedents set out in the Plevin Supreme Court Case. While this may add a bit of time (usually 4-6 months) to the consumers claim, they end up receiving almost 4 times the amount of compensation they would have by accepting their initial offer.

If you are in receipt of a Plevin Offer and want to discuss your options, get in touch with Queensbeck. Our Panel Solicitors are experienced in running such claims through litigation. They have been successful in receiving settlements for the full amount of a PPI Policy for consumers based on the Plevin ruling. We can review your case and select the most appropriate solicitor from our Panel to run your claim.

Click here for further information.

To read some Plevin success stories, take a look at this Money Saving Expert Article: Plevin Article.