IVAs and Payment Protection Insurance (PPI)
What is PPI?
Payment Protection Insurance (PPI) is a product that enables you to insure repayment of loans, mortgages, overdrafts, credit cards and store cards to protect against accident, sickness, involuntary unemployment or loss of life.
In recent years, PPI mis-selling has recently been brought to surface and it something which has been investigated. PPI mis-selling claims relate to Payment Protection Insurance that a Creditor may have mis-sold you whilst you had an agreement with them.
You may not have known you were paying this insurance within your agreement, which is why it could have been mis-sold to you. If you didn’t agree to this insurance, you have the right to claim this money back.
IVAs and Payment Protection Insurance (PPI)
PPI compensation is not considered a windfall. In most IVA proposals, it’s actually classed as an asset and this is why the full amount has to be paid into your IVA arrangement.
Your Insolvency Practitioner has an obligation to maximise returns to creditors, which includes investigating any and all assets. As such, Aperture have instructed First Dispute Management (“FDM”) to act on behalf of IVA estates to investigate possible financial mis-selling, such as unaffordable lending, undisclosed commissions, mis-sold pensions & PPI.
First Dispute Management are a firm of highly experienced, expert solicitors. Who are thorough in their approach and have been appointed particularly for this reason. Previous investigations may have missed cases of financial mis-selling.
It should also be noted that in 2013 Aperture sought to vary the terms of all arrangements under our Supervision to clarify the treatment of PPI. This was to ensure that it no longer impacted our ability to bring an IVA to a successful conclusion where a client was cooperating with their PPI obligations. If they agree to the variation our clients could benefit from the statutory interest element of any successful PPI claim (net of costs). Any successful PPI claims paid into your IVA will enable you to pay back more of your debt which is in keeping with the arrangement’s two key purposes –
- to ensure that your level of debt was frozen and afford you protection from bankruptcy or any other recovery action and
- to enable creditors to receive the best possible return having regard to your circumstances.
Impact of Green v Wright
As you may already be aware, the treatment of compensation arising from claims for mis-sold PPI for those who are subject to a Voluntary Arrangement has been the subject of significant regulatory consideration, with our regulator (the Insolvency Practitioners' Association) issuing its guidance in 2017 following the court ruling in the Green v Wright case.
The decision in Green v Wright explains the entitlement of PPI refunds that are received by a former supervisor following the completion of an IVA. The ruling confirms that the mere issuing of the Completion Certificate will not itself, unless otherwise stated, terminate any trust over the arrangement assets. Therefore, in order for the trust to end, there must be a specific term to this effect which will also confirm what is to happen to the assets covered by this trust. In the absence of such a provision, the trust will continue.
What if my IVA has been completed?
It is important to check your IVA proposal and terms and conditions. PPI compensation may have to be paid into your arrangement even if it is completed – if the PPI is for a debt that was prior to your IVA starting.
This may seem unfair if you’ve received a completion certificate. However, the IVA proposals may still give your Supervisor the right to collect and distribute assets included in your IVA, even though your IVA is completed.
In most cases PPI is due into the IVA whether or not the IVA is live or has closed for the benefit of creditors until 100p/£ is reached.
Can I make a claim myself?
You are free to make a claim yourself, but you must remember that any compensation you receive must be paid into your IVA as claims are an asset of the arrangement which therefore belong to the IVA estate.
Also, you will need to check that any fees for their services are taken from the PPI compensation. This means you will not have to find the money to pay them, which could cause further debt problems.
If you have any queries in relation to any of the above, please do not hesitate to contact us on 0333 939 7920 to discuss this with a member of our team.