A judge has ruled a couple should receive all of the 76% commission they paid on their PPI policy - but if you took out PPI and want to get ALL of your commission back, you'll likely have to go through the courts for now.
The judge at Manchester County Court yesterday ruled that Paragon Personal Finance should repay Christopher and Joanne Doran all of the commission they had paid on their payment protection insurance (PPI) policy.
This amount goes above the guidelines from the Financial Conduct Authority (FCA), which say if over 50% of your PPI’s cost went as commission to the lender, and that wasn't explained to you, you are due back the extra above that, under a ruling known as 'Plevin'.
And although this 50% benchmark has been ignored in the Manchester County Court case, which was first reported by the Financial Times, the FCA says it won't be reconsidering its guidance, and that it always acknowledged that courts could take different approaches to its own.
Remember, you do NOT need to pay a company to reclaim PPI for you. See our Reclaim PPI for Free guide.
What is the 'Plevin' rule?
PPI was an insurance policy sold when you got a loan, credit or store card, catalogue account, overdraft or car finance. It's designed to cover your loan or credit card repayments for a year in the event of an accident, sickness or, in some cases, unemployment.
In itself, it isn't a bad product. But it's been widely mis-sold and now, because of a ruling called Plevin, even just having had it means you're likely due some cash back.
'Plevin' gets its name from a 2014 court case brought by Susan Plevin. The court ruled that she had been treated unfairly as she hadn't been told about the huge amount of commission taken from her PPI payment – 71%.
Since then, the financial regulator has operated under guidelines that if more than 50% of your PPI's cost went as commission to the lender and this wasn't explained to you, you're due the extra, plus interest.
The average commission banks were paid was 67%, meaning millions more people sold PPI are now entitled to money back.
If you've already claimed PPI mis-selling successfully, then you can't claim via Plevin as you've already got some recompense, but you can if you've previously been rejected for a PPI claim.
If, however, you feel you were mis-sold PPI but haven't yet claimed, follow the steps in our Reclaim PPI for Free guide first, as it's likely you'll be owed more cash via this route.
How does this case differ?
In the Manchester County Court case, the judge ruled that the Dorans were due all the commission they paid, rather than just the amount over 50% - plus interest.
Paragon Personal Finance, which lost the case, said it is considering appealing.
A spokesperson for Paragon Banking Group said: "We believe this decision is at odds with other cases heard recently and does not create a precedent.
"The Doran case is one of a handful of legacy cases for Paragon and we are considering our position regarding appeal."
Will the FCA guidelines change?
In a policy statement about PPI published last year the FCA said that the courts " might take a variety of approaches to redress on individual cases", with regards to Plevin rulings.
It added: "However, we remain of the view that our approach, centred on the return of that portion of undisclosed commission plus profit share that exceeded the tipping point, is fair and appropriate."
The FCA told us this morning that its position on this had not changed, and the Doran's case would not lead to a reconsideration.
It said it was correct that if you wanted to obtain more than 50% of the commission back from a PPI policy that you had bought, you'd have to go to court.
It's worth noting that the Manchester County Court ruling is not binding on other courts and so does not set a precedent, but it could be useful to mention if you decide to go down this route.