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Why you need to be aware of Payment Protection Insurance (PPI) claims against estates

The Society of Trust and Estate Practitioners (STEP) has released a warning regarding how PPI claims against estates may impact Executors, Administrators, Court of Protection appointed deputies, Trustees in bankruptcy, and Supervisors of any individual voluntary arrangements.

What is PPI?

Just in case you’re unaware, PPI was intended to cover repayments in certain circumstances on credit and loan products. For example, if an individual was made redundant or couldn’t work due to extenuating circumstances. It is likely that many people who took out a credit card, mortgage or cash loan between 1990 and 2010 were mis-sold PPI. According to Money Saving Expert, approximately 64 million policies were sold in that time frame.

What is the issue?

STEP’s briefing note issued on 16 April 2019 explains how the deadline for submitting claims for compensation for mis-sold PPI is fast approaching. Financial institutions have put billions of pounds aside to pay the compensation, however, much of the money remains unclaimed. The Financial Conduct Authority (FCA) continues to encourage people to check whether they had PPI on loan or credit products, in advance of the deadline on 29 August 2019. STEP’s briefing note highlights how “this guidance will apply also to those acting as, or advising, fiduciaries (who may not know if their principal had entered into any PPI arrangements).

STEP has raised concerns about the risks of not investigating whether a deceased had PPI when administering an estate. In the briefing note, they state: “Claims management companies, after 29 August 2019, may change their focus to pursuing outstanding claims on behalf of beneficiaries against the fiduciaries involved. The potential argument might be that fiduciaries, and their advisers, would have been expected to investigate whether estates were entitled to compensation.”

In the past, it has not been market practice for estate administration providers to check whether estates could be subject to PPI compensation. Many estate administration providers took counsel on this over two years ago and took the view that this would not be an issue. However, this opinion has now changed significantly because the Official Receiver has recently made the decision to review and consider PPI claims in closed bankruptcy cases dating back to 1 January 2000.

Next steps

It is now advisable for estate administration providers to take precautions to protect closed and future estates from claims. STEP advises “…a back-book review of cases active since 1 January 2000, mirroring the stance taken by the Official Receiver, would not appear “unreasonable”, and could reduce the potential for challenges from disappointed beneficiaries, etc.”

 

Sources:

https://www.step.org/sites/default/files/Policy/PPI_Briefing_Note.pdf

https://www.moneysavingexpert.com/reclaim/ppi-loan-insurance/

https://www.fca.org.uk/ppi/ppi-explained

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