25th November 2013
The government has announced that PPI claims firms that break the rules will be subject to tougher enforcement action (including larger fines) in the future. These changes are expected to come into effect next year. This is an industry that currently lacks credibility and trust due to the way that it performs.
In particular the use of unsolicited calls and texts is being targeted, but firms that perform poorly on behalf of their clients are also in the firing line. The additional enforcement staff needed to carry out this work are being financed by an increase in the regulatory fees that all claims firms must pay.
One specific issue that we have been made aware of is false promises being provided to individuals that have completed an IVA in the past. In more recent times PPI claims have been integrated into the IVA process and have been used as a way to recover increased sums of money for the creditors that are involved.
Many people that completed their IVAs some time ago will not have had PPI claims integrated into their IVA. Can they recover money for PPI payments made in the past if they’ve been subject to an individual voluntary arrangement? Certainly some claims firms are providing them with an emphatic “yes” when the question is being asked.
Unsurprisingly banks that have written off debts might be unwilling to subsequently make PPI payments to the beneficiaries of this IVA debt write-off. Certain banks have adopted this position and it appears that this stance is generally being supported by the Financial Ombudsman. However if the bank admits liability, but then sets-off the amount concerned against an old debt, are the claims company still able to issue you an invoice? Some seem to think so. How would you pay it?
In some circumstances it might also be viable for an IVA to be re-opened retrospectively if a large PPI payment was notified to a previous IVA supervisor. Banks tend to notify insolvency practitioners that have previously been involved in a past insolvency prior to making payment to the PPI claimant. Are claims companies warning people about this? Not generally.
So does this mean that you shouldn’t claim for PPI if you’ve been discharged from an IVA in the past?
Not necessarily, but we’d advise on balance against using the services of a claims company. We’d suggest that instead you make the claim yourself and follow the guidance on various consumer websites on how to do this. Don’t count on physically receiving the cash if the claim is to a lender that was involved in your IVA and who wrote off some of your debts to them. This remains the case even if they appear to be right on the verge of sending you a cheque. Be prepared for banks to contact your old IVA firm. Understand that in certain circumstances there is a technical risk that your IVA might be re-opened.
Most importantly, if a claims firm promises you the earth (after you’ve told them you were previously in an IVA) take those promises with a large dose of salt. You’ll probably be talking to a salesman, not an expert with any genuine knowledge in this niche, uncertain and technical area of PPI claims.