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Re: Latest Update on PPI Judicial Review - NO APPEAL - get your claims in......
Disp/App/3.7 from the FOS PPI Handbook covers "Alternative Redress" - and I suspect that this will be increasingly used or abused by lenders as a way of reducing the inevitable payouts. Basically, as I read it, IF the 'firm' (the lender) decides to PRESUME that the 'complainant' (the borrower) WOULD have taken out PPI from an alternative provider, then the FOS supports a reduced payout, which is based on the difference between what was charged for the original mis-sold PPI, and what the FOS has decided (in 3.7.13) WOULD have been charged by a cheaper PPI provider.
Quite possibly, an innocent answer to the FOS questionnaire may be all that is required to implement this, so I think we should be VERY careful with our answers to it.
I'm not sure if this is actually what is being offered in SKV123's case, but it seems based on a similar principle.
FSA Handbook - Full Handbook
May not be relevant here, but it seemed worth a mention.
Originally posted by di30
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Quite possibly, an innocent answer to the FOS questionnaire may be all that is required to implement this, so I think we should be VERY careful with our answers to it.
I'm not sure if this is actually what is being offered in SKV123's case, but it seems based on a similar principle.
FSA Handbook - Full Handbook
Alternative approach to redress: single premium policies
DISP App 3.7.7
01/12/2010
Where the only breach or failing was within DISP App 3.6.2 E (9) and/or DISP App 3.6.2 E (12), and in the absence of evidence to the contrary, the firm may presume that instead of buying the single premium payment protection contract he bought, the complainant would have bought a regular premium payment protection contract.
DISP App 3.7.8
01/12/2010
If a firm chooses to make this presumption, then it should do so fairly and for all relevant complainants in a relevant category of sale. It should not, for example, only use the approach for those complainants it views as being a lower underwriting risk or those complainants who have cancelled their policies.
DISP App 3.7.9
01/12/2010
Where the firm presumes that the complainant would have purchased a regular premium payment protection contract, the firm should offer redress that puts the complainant in the position he would have been if he had bought an alternative regular premium payment protection contract.
DISP App 3.7.10
01/12/2010
The firm should pay to the complainant a sum equal to the amount in DISP App 3.7.3 E less the amount the complainant would have paid for the alternative regular premium payment protection contract.
DISP App 3.7.11
01/12/2010
The firm should consider whether it is appropriate to deduct the value of any paid claims from the redress.
DISP App 3.7.12
01/12/2010
Additionally, where a single premium was added to a loan, DISP App 3.7.4 E applies except that in respect of DISP App 3.7.4 E (1)(a) the cancellation value should only be used if the complainant expressly wishes to cancel the policy.
DISP App 3.7.13
01/12/2010
The firm should, for the purposes of redressing the complaint, use the value of £9 per £100 of benefits payable as the monthly price of the alternative regular premium payment protection contract. For example, if the monthly repayment amount in relation to the loan only is to be £200, the price of the alternative regular premium payment protection contract will be £18.
DISP App 3.7.14
01/12/2010
Where the firm presumes that the complainant would have purchased a regular premium payment protection contract and if the complainant expressly wishes it, the existing cover should continue until the end of the existing policy term. The complainant should pay the price of the alternative regular premium payment protection contract (at DISP App 3.7.13 E) and should be able to cancel at any time. This pricing does not apply where DISP App 3.7.4 E (1)(b) applies.
DISP App 3.7.15
06/04/2011
So that the complainant can make the decision on the continuation of cover from an informed position, the firm should:
(1) offer to provide details of the existing payment protection contract;
(2) inform the complainant that he may be able to find similar cover more cheaply from another provider in the event that he chooses to cancel the policy and take an alternative but remind the complainant that if his circumstances (for example, his health or employment prospects) have changed since the original sale, he may not be eligible for cover under any new policy he buys;
(3) make the complainant aware of the changes to the cancellation arrangements if cover continues;
(4) explain how the future premium will be collected and the cost of the future cover; and
(5) refer the complainant to 1, org.uk1 as a source of information about a range of alternative payment protection contracts.
DISP App 3.7.7
01/12/2010
Where the only breach or failing was within DISP App 3.6.2 E (9) and/or DISP App 3.6.2 E (12), and in the absence of evidence to the contrary, the firm may presume that instead of buying the single premium payment protection contract he bought, the complainant would have bought a regular premium payment protection contract.
DISP App 3.7.8
01/12/2010
If a firm chooses to make this presumption, then it should do so fairly and for all relevant complainants in a relevant category of sale. It should not, for example, only use the approach for those complainants it views as being a lower underwriting risk or those complainants who have cancelled their policies.
DISP App 3.7.9
01/12/2010
Where the firm presumes that the complainant would have purchased a regular premium payment protection contract, the firm should offer redress that puts the complainant in the position he would have been if he had bought an alternative regular premium payment protection contract.
DISP App 3.7.10
01/12/2010
The firm should pay to the complainant a sum equal to the amount in DISP App 3.7.3 E less the amount the complainant would have paid for the alternative regular premium payment protection contract.
DISP App 3.7.11
01/12/2010
The firm should consider whether it is appropriate to deduct the value of any paid claims from the redress.
DISP App 3.7.12
01/12/2010
Additionally, where a single premium was added to a loan, DISP App 3.7.4 E applies except that in respect of DISP App 3.7.4 E (1)(a) the cancellation value should only be used if the complainant expressly wishes to cancel the policy.
DISP App 3.7.13
01/12/2010
The firm should, for the purposes of redressing the complaint, use the value of £9 per £100 of benefits payable as the monthly price of the alternative regular premium payment protection contract. For example, if the monthly repayment amount in relation to the loan only is to be £200, the price of the alternative regular premium payment protection contract will be £18.
DISP App 3.7.14
01/12/2010
Where the firm presumes that the complainant would have purchased a regular premium payment protection contract and if the complainant expressly wishes it, the existing cover should continue until the end of the existing policy term. The complainant should pay the price of the alternative regular premium payment protection contract (at DISP App 3.7.13 E) and should be able to cancel at any time. This pricing does not apply where DISP App 3.7.4 E (1)(b) applies.
DISP App 3.7.15
06/04/2011
So that the complainant can make the decision on the continuation of cover from an informed position, the firm should:
(1) offer to provide details of the existing payment protection contract;
(2) inform the complainant that he may be able to find similar cover more cheaply from another provider in the event that he chooses to cancel the policy and take an alternative but remind the complainant that if his circumstances (for example, his health or employment prospects) have changed since the original sale, he may not be eligible for cover under any new policy he buys;
(3) make the complainant aware of the changes to the cancellation arrangements if cover continues;
(4) explain how the future premium will be collected and the cost of the future cover; and
(5) refer the complainant to 1, org.uk1 as a source of information about a range of alternative payment protection contracts.
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