PPI: my firm’s approach

On 24 July, the Law Society released a short statement on its website about the pending payment protection insurance (PPI) claim deadline.

PPI is the UK’s largest ever miss-selling scandal. 64 million PPI policies, representing £50bn of cover, were sold by banks, building societies and credit card companies. FCA data indicates that, for complaints made in 2018, the average uphold rate was 71%, and the average redress was £2,001. In addition, for those 29% of claims that fail in their miss-sale complaint, 68% will succeed in recovering under the Plevin ruling instead, where average redress is £1,191.

For traditional private client lawyers, the issue needs to be considered in the context of the administration of a deceased person’s estate, Court of Protection-appointed deputies, and appointments made under a property and financial affairs lasting power of attorney (or its predecessor, the enduring power of attorney). An executor or administrator is responsible for ensuring that they maximise the value of the estate being administered for the beneficiaries; deputies and attorneys are similarly responsible for ensuring that the incapacitated person’s assets are protected.

What advice already exists?

If a PPI miss-sale claim is not made before the FCA’s 29 August 2019 deadline, the right to claim will be lost. Professor Lesley King’s June article for the Private Client Section considered this issue, and her guidance emphasised the importance of executors making PPI claims before the deadline and the various risks in not doing so. Estimates suggest that a potential £18bn of redress may be tied up within the estates of the approximately 15 million people who have died since 1985.

The Society of Trusts and Estates Practitioners (STEP) has issued a briefing note (pdf) stating that executors and administrators (to avoid any subsequent claims of negligence) should consider recovering PPI in relation to open and closed estates.

What we did

Like many firms, Talbots Law has acted as professional executor on hundreds of estates, and advised lay executors and administrators on many thousands more. The firm also has directors who act as professional deputy or attorney on numerous matters. This led us to consider our position where members of the firm held an appointment as either executor, deputy or attorney.

Our case management software for estate administration included within its standard initial letters to the deceased’s bank / financial institutions, asking if PPI was ever sold to the deceased, requesting that this was checked, and to notify us if any PPI was found, so that we could raise a complaint and make a claim. Similar enquires on PPI were made on being appointed deputy or attorney with banks / financial institutions that were active at the time of appointment.

This gave us some comfort, as it showed that we had previously taken steps to contact banks and financial institutions that were active at the time of appointment to make PPI enquires; however, we could not be sure that other claims might exist where the loan or account containing the PPI was closed before death.

Where firms have large volumes of matters dating back to the year 2000, there are significant administrative and technical burdens associated with bringing claims in the short time remaining before the deadline. Solutions have emerged from the claims management sector, which provide for bulk processing of claims and offer a potential solution to achieve compliance ahead of the deadline. Talbots’ case management system allows us to extract data easily, so we chose to use a bulk provider to complete one final search. This may not be an option available to all firms.

We chose a claims management specialist – one of those mentioned by Professor King in her article – and followed the guidance issued by the Solicitors Regulation Authority to solicitors in dealing with these claims.

Such services are 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 miss-sold is not necessary.

At Talbots, we also considered the position where we provided administration services to, or advised, lay executors, deputies and attorneys, to assess if it is reasonable to notify those clients about the PPI issue. The passage of time, changes of address and potential lay client apathy may mean those clients could miss the deadline and become exposed to potential claims if they do not act. Therefore, we considered whether we needed to act in the lay clients’ best interests and bring PPI claims on their behalf, and only notify them if the claims are successful and funds need to be distributed. Given the data we have available to us and our ability to run the checks in a straightforward and systematic fashion, we opted to take this course of action.

Not every firm will have the same numbers of files to check that Talbots did, or the systems that allow this to be done efficiently before the passing of the deadline for claims. Each firm will need to consider the action to take given its own circumstances. The guidance from the Law Society, STEP and others confirms that there is no duty on law firms to make claims, but only to consider the position of their firm if they were ever unsure as to the extent of their instructions that they have acted for the personal representatives in their professional capacity.

Our view was that we had the systems in place that would allow one final check to be made, and that if any funds did come to light as a result of the exercise, then it was better for these funds to be in the hands of the clients, or their estates, than in the hands of the banks and financial institutions. We wait to see what comes from the exercise.