Significant decision on calculation of compensation for PPI claims
Jonathan Butters acted for the claimants who had taken out PPI alongside a mortgage with Paragon Finance in 2004. At the time Paragon did not inform the claimants that 76% of the PPI policy premium charged by the insurers would be retained by them as commission and profit share.
At trial, His Honour Judge Pearce found that there was an unfair relationship between the claimants and Paragon on account of the non-disclosure of the large commission payment. He accepted the claimants’ evidence that they would not have taken out the PPI policy if they had known of the commission payment. Accordingly, the Judge ordered Paragon to repay the full PPI premium plus interest.
The Judge rejected Paragon’s argument that the relief should be restricted to the award the claimants would have been entitled to under the FCA redress scheme (the difference between the commission percentage and 50%).
This is the first published decision in which a court has rejected the FCA approach to the remedy for PPI mis-selling. If, as expected, the approach is followed in other cases it will significantly increase the amount banks will have to pay out for PPI claims.
Jonathan Butters was instructed by Michael Muldoon of Muldoon Britton solicitors.Back to News
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