This page is intended as a useful resource for professional executors who are confronted with the issue of Payment Protection Insurance and the FCA Deadline.
Payment Protection Insurance (PPI) is the UK’s largest ever mis-selling scandal. 64 million PPI policies, representing £50 billion of cover, were sold by banks, building societies and credit card companies: FCA – PPI Explained
If a PPI mis-sale claim is not made before the FCA’s 29th August 2019 deadline, the right to claim will be lost. Given the imminent deadline, this article provides practical advice on what firms can do in order to avoid beneficiaries missing out on PPI compensation; such beneficiaries would include charities who will have an interest (often as residuary beneficiaries) in a significant proportion of all estates and who could therefore miss out on significant sums if action is not taken by executors.
PPI was widely mis-sold. FCA data indicates that, for complaints made in 2018, the average uphold rate was 71% and the average redress was £2,001: PPI Complaints Deadline Progress Report (those two statistics are broadly similar across all complaints made to date). In addition, for those 29% of claims which fail in their mis-sale complaint, 68% will succeed in recovering under the Plevin ruling instead, where average redress is £1191.
Estimates suggest that a potential £18 billion of redress may be tied up within the estates of the c. 15 million people who have died since 1985.
The Official Receiver is reopening all closed bankruptcies going back to 2000 and collecting in PPI: PPI Claims and The Official Receiver
The Society of Trusts and Estates Practitioners (STEP) have stated that executors and administrators (to avoid any subsequent claims of negligence) should consider recovering PPI in relation to open and closed estates: PPI Briefing
In addition, the Law Society recently commissioned Professor Lesley King to consider this issue and her guidance also emphasises the importance of executors making PPI claims before the 29 August deadline and the various risks in not doing so: PPI and Private Client Practitioners
Finally, many large probate providers are re-opening their closed estates back to 2000 and collecting in PPI, for example: Kings Court Trust – PPI Claims against Estates
Professional Executors and law firms should assess their risk exposure in this area.
Firms who have acted as executors or administrators are advised to take action before the deadline and collect in PPI on both open and closed estates. We include in this category law firms who provide bulk probate services to banks, building societies, charities and will writers as well as companies who provide probate services to individuals.
In addition, firms who have provided administration services to, or advised, lay executors must assess if it is reasonable to simply notify those executors about the PPI issue. The passage of time, changes of address and potential lay executor apathy may mean those executors could miss the deadline and therefore the firm become exposed to potential claims if they do not act. Therefore, firms should consider the basis on which they were instructed in relation to the trust and/or estate, and whether they need to act in the lay executors’ best interests and bring PPI claims on their behalf.
If firms are unsure if PPI was ever sold to the deceased, they can ask PPI providers to check. Most of the larger PPI providers will automatically raise a complaint for any PPI policy found following such a checking enquiry. When deciding which PPI providers to approach to ask if they ever sold PPI to the deceased, firms should have regard to the likelihood of the deceased ever having purchased PPI from a particular PPI provider; such a likelihood could be evidenced from the estate accounts. In addition, Services such as ‘MyLostAccount’ may be helpful in identifying the main institutions to approach but time may be against the firm.
Useful information can be found on the FCA website here
It is not necessary to provide detailed client data such as health, financial or occupation information when making a complaint. Nor is it necessary to have access to the circumstances at time of sale.
Large volumes Where firms have large volumes of matters dating back to the year 2000 then there are significant administrative and technical burdens associated with bringing large volumes of claims in the short time remaining before the deadline.
Crystal has developed a bulk-processing service designed specifically for firms with large back books. This provides a potential solution to achieve compliance ahead of the deadline.
Crystal is able to provide its bulk processing service to any firm who can submit its data to Crystal before Monday 12th August.
The service is provided under an agency contract and require firms to provide their data in a prescribed template. The data required includes: date of birth, date of death and last known address of the deceased. Information about the sales process and evidence that the product was mis-sold is not necessary. The template can be viewed here
Crystal Legal Services Ltd are FCA-authorised Claims Management Specialist who can support firms with large back books (above 500 estates) and who have already been engaged by a number of law firms to address PPI on both closed and open deceased estates.
If your firm would like to engage Crystal then you should confirm the following
1. Your firm can provide the estate information via the template here 2. You can provide this information to us before 12th August 2019 which is our cut-off. It is unlikely we will be able to accept more firms after this date due to the work required to do before submitting the files to banks 3. You have read the FAQ document available here 4. Our supply of services contract is here 5. Each firm will be asked to provide an undertaking to each bank we approach, of which there are 11 in total. An example is contained within contract. We will provide a list of these once you have submitted your data and contract. These will be needed on your firms’ headed paper and signed by an authorised signatory for your firm or partnership.
If you meet the above criteria and would like to engage Crystal please send your details to email@example.com and we will get in touch. Please provide contact details for you and the firm, and an estimate of the number of estates you are considering submitting, so that we can allocate the correct consultant.
Once we have your data and contract our data team will review the file and advise you of any issues or records that we cannot process, including reasons why. We will identify if any additional indemnities are required and request these from you.
Once we have all of the required documents from your firm we will ensure the files are submitted to banks ahead of the 29th August deadline.
Most executor firms have little/ no information about the specific financial agreements held by the deceased. Using our market knowledge, our process will therefore target those financial institutions responsible for 95% of the PPI sold in the last 30 years.
One of the challenges of the project will be the banks ability to locate the client in their database. As such, it is important that we are provided with as much information about the deceased as possible from firms submitting data.
Due to the lack of detailed information provided by executors, i.e. evidence of the presence of PPI, it is not possible to guarantee any specific level of financial redress. Our process will check UK banks.
Due to the proximity to the deadline there is not sufficient time to run checks only on files. Our service will provide checking and claiming within one process
The project should identify and recover PPI policy premiums from the estate. Where redress is paid by banks it will consist of premiums paid, any contractual interest and statutory compensation at 8%.
We expect to receive these funds into our client account and will remit net fees after costs to the firms client account, including details of the specific estates to which it relates. The executor will can then deal with any tax matters and distribution to beneficiaries.