Re IP Responsibilties

[TomOConnor]

A number of people on the forum know me but for those not aware, I am an employee of ClearDebt predominantly involved with the issue of PPI mis-selling within IVAs. I apologise for the long post in advance but I believe there has been so much poor information posted both on this site and others relating to PPI mis-selling claims within IVAs that a number of points need to be clarified.

Within DISP Appendix 3 – Handling Payment Protection Insurance Complaints the FSA confirms a number of points relating to the potential reasons a policy may have been mis-sold. A number of these potential failures will require the individual’s specific opinion – for instance:

(1) Pressured the complainant into purchasing the payment protection contract

Only an individual present at the sale can confirm whether or not this was indeed the case. Accordingly, in instances such as this I would agree that the opinion of the individual should be paramount.

However, a number of the other reasons for mis-sale are related to specific facts to which the individual’s opinion is irrelevant. For instance:

(6) did not take reasonable steps to ensure the complainant only bought a policy for which he was eligible to claim benefits

If an individual was self-employed, had a recurring medical condition or was entitled to full sick pay from their employer – this policy has been mis-sold regardless of whether the individual subject to the IVA believes otherwise.

With regard the comments relating to single premium insurance, there are a number of points which are crucial to this:

(8) did not disclose to the complainant, in good time before the sale was concluded, and in a way that was fair, clear and not misleading, the total (not just monthly) cost of the policy separately from any other prices (or the basis for calculating it so that the complainant could verify it.

(9) recommend a single premium payment protection contract without taking reasonable steps, where the policy did not have a pro-rata refund, to establish whether there was a prospect that the complainant would repay or refinance the loan before the end of the term.

(10) provided misleading or inaccurate information about the policy to the complainant

(12) in the sale of a single premium payment protection contract, failed to disclose to the complainant, in good time before the sale was concluded, and in a way that was fair clear and not misleading:

(a) that the premium would be added to the amount provided under the credit agreement, that interest would be payable on the premium and the amount of that interest; or

(b) (if applicable) that the term of the cover was shorter than the term of the credit agreement and the consequences of that mismatch; or

(c) (if applicable) that the complainant would not receive a pro-rata refund if the complainant were to repay or refinance the loan or otherwise cancel the single premium policy after the cooling off period.

Although taken in isolation, being in possession of a single premium policy does not necessarily mean that it was mis-sold, however, I’m sure most of you will recall from any forms of credit that you have taken out:

- Creditors did not ask questions about whether you intended to repay the loan early – many have admitted as such.

- Did not offer a pro-rata refund should the policy be repaid early

- Did not provide written documentation confirming that no pro-rata refund would be available

In this way, where it is known as a fact, that a creditor has never included any confirmation of the above points either in their original sales script or within their documentation – the policy has been mis-sold.

Given that the benefits from a monthly premium policy and a single premium policy are identical, nobody would realistically choose to take the more expensive product. For a creditor to claim otherwise borders on the ridiculous.

As it is the Supervisor’s obligation to ensure assets are realised, how can the Supervisor take the opinion of an individual in these circumstances over what is known to be fact?

Fortunately the vast majority of individuals are more than happy to comply with the process regardless of any potential delay in issuing the completion documents as they understand their obligations under the IVA and want to repay as much to creditors as possible.

Unfortunately, there will always be individuals who believe they have not been mis-sold a policy which they clearly were; more unfortunately there will be a smaller number of individuals who will purposefully claim not to have been mis-sold despite being fully aware of the above solely to escape their obligations and receive their completion certificate.

I must disagree with ivoriva as well. Compensation for mis-sold PPI is an asset of the arrangement which must be recovered in the same manner as other assets. To say that individuals should be able to choose whether or not to claim is to say they should choose whether or not they should pay in the equity from a property.

Finally, to refer back to the original point so as not to completely hijack the thread, all of the confusion in the industry at the moment is due to a variety of firms for one reason or another not fulfilling their obligations. My opinion is that every Supervisor who is not treating these assets seriously will soon find themselves answering some difficult questions from both creditors and regulatory bodies alike.

The knock on effect is for the vast majority of firms (such as the one I represent) who are acting correctly, are taking the flak on forums such as this due to the poor practice and dereliction of duty of other firms.

[MelanieGiles]

That is a really useful post Tom, and thank you for sharing those details. Can I just clarify that mis-sold PPI reclaims are only assets of the IVA where the proposal specifically states them to be, or where there is an overall "all-assets" provision. Some IVA proposals will not include such provisions an therefore the asset is rightly the debtor's to do what they like with it.

As an aside, given that the debtor is the Trustee of the claim but the Supervisor is the beneficiary of the Trust, surely you can simply go direct to the creditor if you have an unco-operative client and make the claim directly? This is the legal advice that I have received on this specific point.

[ivoriva]

Hi Tom,

Firstly thanks for the post. It is very informative and gives us all a chance to reflect on the issues from both sides of the fence as it were. In response, from reading the above, then it would seem it is completely un-neccessary for an IP to get us 'debtors' to sign anything - other maybe to allow a 3rd party to investigate the claim - as you are saying its pretty much mis-sold by default and our 'opinion', in most cases, doesnt count?
Also from my side of the fence, it is delaying completion considerably, so another positive step forward would be to issue certificates regardless of claims. As its an assett that existed prior to the IVA that should be included, I cant see why it cant be pursued (and it is being in some cases I believe) after the certificate is issued. Btw, please dont feel I'm targetting arguements at you or your company, or any other for that matter - I'm just discussing the points as an individual. Lets not forget that delayed completion means we are being held by cetain conditions and are unable to move on with our lives as we should. And thats unfair on those near or at the end of their IVA.

[Jamie.73]

Good post agree with almost all of the points. Some extra information that some people may find interesting. Car insurance pays out in the regaion of 80p per £1 received in premiums. PPI is between 10-15p. In addition many of the premiums I have scanned have been higher than what the pay out would be. There is usually a clause that states payments are only protected for 12 months. Lets take a 10k loan were 3k was say PPI on top. Monthly repyaments might be at £150 per month that means even if the PPI works as it should only £1800 would be paid out on £3000 worth of PPI.

In addition I have processed one file (a large IVA it has to be said) that had 33 PPI policies in it. It transpired the debtor client would have been covered by his employer so PPI was not required. It is also likley that if the debtor client had PPI he would not have got into the situation he was in.

We find that in the files we audit and process over 80% is miss sold. This is however likley to be higher than most as the IVAs we work on tend not to be standard protocol type and the debtor clients are self employed or directors and such.

I look forward to seeing the guidence being issued for IPs.

[ivoriva]

Interesting info Jamie! What I think is really called for here is proper guidance, so it is fair to one and all.
Not only that, is it beyond the realms of possibility that the banks couldnt look at debtors who have/had an IVA and PPI and notify the IP and/or debtor so those that didnt have PPI neednt go through all the delays? I'm sure it would be easier for everyone that way.

[MelanieGiles]

As a profession, we are working towards this with the regulatory bodies and our respective legal advisors. Rome wasn't built in a day, and neither will the guidelines - but I would hope that this may be addressed properly this side of Xmas.

[ivoriva]

Thanks Mel - if you hear anything, and can share it, please do so! It would make a nice xmas pressie regardless which side of the fence we sit.

[Tina Shortland]

I think it will be beneficial all round once something is in place.. Mel will be keeping the focus on it.

Thanks for the informative post Tom - sometimes these things have to be lengthy to give over enough information, so thanks for not skimming over it.

[Jamie.73]

Not sure creditors will capitulate. As I recall earlier this year the banks were going to write to us all with regards to being miss sold PPI. I have never received a letter and I claimed a PPI last month. In addition I dont know anyone else who has received one of these letters or have I come accross any debtor clients who have received a letter. Does anyone else know or who has had a letter from there bank? We have found 2 types of creditors. The 1st wants to clean up the "oil spill" of PPI the others do not. Hopefully those who want to sort the issue out would act in this way.

[Foggy]

Following on from Tom's post -- I would like to re-iterate the point about us debtors being confident that we were not mis-sold.

I was one of those adamant that my IP would be wasting their time. However, with three years still to run, I had the luxury of the time to get anything settled and out of the way.

Guess what ? .... They discovered over £7000 of PPI from a long ago loan, which had been rolled into subsequent loans with the same company, which I knew nothing about, as current loan documents had no PPI on them.

As my only real reason for chosing IVA over BR was to maximise the return to my creditors (no owned property to protect) I must say I was (yes, surprised) wrong .. yet chuffed.

[MelanieGiles]

A prime example of why good firms are doing their duty to creditors - ie realising the assets of the estate.

[TomOConnor]

Melanie – I agree fully that in effect the IP should be able to be the claimant and the advice we have is the same as yours, however it is obviously preferential for the individual to be a party to the claim not only as the IP was not present at the point of sale, but primarily because creditors internal systems do not recognise the authority of the IP (despite MOJ guidance).

Although it would make all of our lives much simpler, creditors are not making it easy for claims to be processed regardless of what is claimed on the news.

ivoriva – I don’t for a second believe that you are targeting ClearDebt or any other IP for that matter and I do feel sympathy for all those affected. The industry as a whole were not in a position to act as swiftly as all of us would have liked and it is predominantly individuals who have complied fully with their IVAs for 5 plus years who are being penalised.

As much as every IP would love to issue completion certificates, the reality is that the post completion/termination powers that the Supervisor holds are there to be used when a material fact only comes to light after the closure of the case – they are not there to deliberately issue completion certificates where all potential assets have not been realised and I believe that there would be regulatory issues in doing so.

We are looking at options to try to help individuals whose completions have been delayed but any potential solution is not going to be forthcoming overnight. In the meantime you and all others affected by this issue have my sympathies, but I cannot see any other way for this to be dealt with.

I also agree with you regarding banks advising individuals of claims also but in the current climate this is not going to happen. I have hundreds of examples of creditors responding to us claiming there is no PPI attached to an agreement when I have documentation proving that there is.

[Skeef143]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Foggy

Following on from Tom's post -- I would like to re-iterate the point about us debtors being confident that we were not mis-sold.

I was one of those adamant that my IP would be wasting their time. However, with three years still to run, I had the luxury of the time to get anything settled and out of the way.

Guess what ? .... They discovered over £7000 of PPI from a long ago loan, which had been rolled into subsequent loans with the same company, which I knew nothing about, as current loan documents had no PPI on them.

As my only real reason for chosing IVA over BR was to maximise the return to my creditors (no owned property to protect) I must say I was (yes, surprised) wrong .. yet chuffed.

I've had something a little similar to this, Foggy....

When I started tackling my debt, I began thinking back to a consolidation loan from my biggest creditor which was done mainly over the phone, although I'm sure I must have had to sign something, and I couldn't find any paperwork for an agreement.

I even did those "calculate your PPI refund" exercises in those little boxes, and they said I wouldn't be entitled to anything, so I never bothered. Anyhow, a couple of months ago my IP wrote to me saying they were going to get a claims company to call me (I think they must be linked, as the claims company has the same address as my IVA company!) about reclaiming PPI, and explained it would go towards my IVA etc. and wouldn't cost me anything. So like Foggy, I have plenty of my IVA still to run so I agreed, and spoke to the claim company.

The loan was 16,000, total repayment 24,953.04 over 84 months, ie 8,953.04 interest - anyway, said creditor has come back with two offers (one dates to the original loan I took out a year before, which was included in the consolidation), combined total 7,335!!!

I realise this is before the claims/IVA companies take their fees from it, but I was amazed as you can imagine. In a strange way, it has eased my mind a bit, eg if I run into trouble for whatever reason further along the IVA, they have had some unforeseen extra money already.

[Kelherring]

Thank you very much for the thread. I have been stubbornly refusing to complete my PPI documents as I truly believed that as I wasn't pressured to take PPI on a have the policy or don't have the loan basis and had read the PPI documents that I wasn't missold; and I did not want to claim believing this feeling as it would have been fraudulent to do so. Having read the advice however there are lots of issues relevant that I hadn't considered eg full sick pay, early repayment etc. I will now pursue this and with so little left to pay this could prove very useful.

[MelanieGiles]

Good for you kelherring - it is quite suprising the amount of compensation being paid out by the banks at the moment. Well worth looking into.