The ruling means that millions of people will be eligible to join a new multi-billion pound wave of PPI claims.
While the first set of PPI claims was based around mis-selling, this new generation of claims centres on banks and credit card companies secretly taking huge commissions from customers who signed up to the insurance product.
For years, banks and credit card companies have tried to argue that, under limitation laws, they should not be forced to pay back any PPI secret commission money if it was taken more than six years ago.
However, last week, the Supreme Court ruled that that financial institutions could not rely on a limitation defence if they deliberately concealed the commission from their customers.
Law firm Harcus Parker, which has launched a group legal action to help customers reclaim PPI based on the unfair and undisclosed commissions, welcomed the ruling.
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Damon Parker, senior partner at Harcus Parker, said: “The banks and credit card companies have been looking for loopholes to try to avoid paying back this money that should never have been taken in the first place.
“They took advantage of their customers. On average, they were secretly charging commissions of around 80% on PPI. It really was outrageous behaviour. Our group legal claim should not even be necessary. They should just pay back the customers without the need for court action.
“The Supreme Court judgment has helped ensure millions of bank and credit card customers can claim back the money that should never have been taken in the first place. This is a victory for consumers against the banks.”
Canada Square vs Beverley Potter
The case decided on Wednesday centred on Canada Square (previously Egg Banking) vs Beverley Potter.
In 2006 Potter entered into a loan for £16,953.00 with Egg. As part of this agreement she took out a PPI premium which cost her £3,834.24 and was added to the loan.
Crucially though, Egg did not disclosure that more than 95% of the premium was commission. It meant only £182.50 of the PPI was paid to the insurer while the bank took the rest of the money.
In 2018, Potter complained to Canada Square regarding the PPI and was paid compensation of £3,160 on the basis that it had been mis-sold. But this amount did not fully compensate her, so in January 2019 she issued a claim for the remainder of what she was owed based on the fact the amount of commission she was charged had not been disclosed by the bank.
Canada Square argued that because she had redeemed her loan in 2010 she could not claim back the rest of the PPI money as it was past the limitation period of more than six years ago.
But the Supreme Court found that because this commission had been deliberately concealed from Potter, Canada Square could not rely on a defence that Potter had brought her claim too late. It consequently ruled in her favour.
Banks have paid out an estimated £38bn in PPI claims over the past 20 years. This new group legal claim, which is based on breaches of the Consumer Credit Act, is estimated to be worth up to £18bn.
Who can claim for PPI secret commissions?
Anyone falling into one of the following categories could have a claim for PPI secret commissions:
- If you ever had a PPI claim rejected
- If you were only paid back compensation based on the amount of commission you paid over 50% of the premium
- If you had PPI but never previously made a claim
Anyone wishing to apply to join the group legal action should visit: www.ppiglo.com.
