PART 3
DECEMBER 2012
PPI ON SECURED BORROWING
31.9A.54 Scope of part (amended August 2013)
This part provides guidance to official receivers on cases where agents where instructed pre September 2013 to deal with PPI mis-selling complaints relating to policies bought on secured loans. PPI may have been purchased in relation to a loan secured on the bankrupt’s home, or another tangible asset such as a car on hire purchase, see paragraphs 31.9A.64 to 65.
Guidance with regard to realising PPI mis-selling complaints relating to secured and unsecured debts is provided in Part 4.
31.9A.55 PPI and secured loans
A PPI mis-selling complaint in relation to a secured loan is generally anticipated to have a more positive benefit to insolvent estates than a PPI mis-selling complaint against an unsecured loan. This is because the size of the loan is likely to be larger and consequently any potential PPI compensation payout would also be larger. Additionally as there may be no unsecured element of the debt, the loan creditor will have no right of set off (See Part 5).
31.9A.56 Enquiries into PPI on secured creditors
Enquiries should be made in respect of all PPI policies obtained by the bankrupt within the last six years in relation to secured loans, whether or not the loans have since been repaid/refinanced (see paragraph 31.9A.27). See Part 2 for guidance on the initial action to take to identify a PPI policy that may have been mis-sold.
To obtain information with regards to any PPI policy taken out by the bankrupt on a secured loan, the mortgage letter [note 1] should be sent to the mortgagee after the insertion of additional paragraphs requesting information with regards to the policy, see Annex C for the guidance on the text to insert.
31.9A.57 The Service is no longer using agents for pursuing PPI complaints on secured debts (amended August 2013)
From September 2013, The Service’s agents are no longer dealing with PPI claims relating to secured debts. See Part 4 for guidance on action to take in relation to PPI mis-selling complaints on secured and unsecured loans.
31.9A.58 (deleted August 2013)
31.9A.59 (deleted August 2013)
31.9A.60 (deleted August 2013)
31.9A.61 Agents - case progress (amended August 2013)
The Service’s agents will continue to act on cases where instructions were issued prior to September 2013. The agents will communicate the following information to the owning office:
(a) Confirmation that they have received the instruction.
(b) Confirmation when a complaint is not going to be pursued or has been unsuccessful and a matter has been closed.
The agents will confirm with OR Business Delivery Operations when a complaint has been successful and monies are due to be remitted to the Service. OR Business Delivery Operations will then notify the official receiver when a payment is actually received through the agents.
31.9A.62 Keeping a case open for PPI resolution (amended August 2013)
Should the handling of a potential PPI complaint by agents, instructed by The Service pre September 2013, be the only outstanding matter on a case, then the case should remain open, and be retained by the official receiver’s office.
31.9A.63 Re-vesting of bankrupt’s home and PPI
Where the bankrupt’s home has re-vested in the bankrupt [note 2], this will not effect any compensation payments received from a PPI mis-selling complaint, which will still be payable to the official receiver as trustee of the bankrupt’s estate. This is due to the fact that the PPI is a stand alone insurance contract and does not fall within the definition of ‘an interest in a dwelling house’ [note 3].
31.9A.64 Vehicle purchased on hire purchase – agreement has not been adopted
The adoption or non-adoption of the agreement of a hire purchase agreement (see Chapter 31.2, Part 2), relates only to the official receiver’s ability to exercise a right of redemption in respect of the goods subject to the agreement. Consequently, the non-adoption of a hire purchase agreement does not affect the vesting of a PPI complaint in respect of a PPI policy taken out in relation to the hire purchase agreement.
31.9A.65 Vehicle purchased on hire purchase – bankrupt released from liability on discharge
As with other property which comprises part of the bankrupt’s estate, the bankrupt is released from any liability under the hire purchase agreement on discharge [note 4]. The bankrupt may have chosen to continue paying any amounts due under the hire purchase loan in order to retain use of the vehicle, not through a legal obligation to do so.
The monthly hire purchase payments are likely to include an amount towards the loan obtained for the initial purchase of the PPI policy as often the amounts cannot be easily separated (see paragraph 31.9A.5). By continuing to make payments, the bankrupt is not acquiring an interest back in the PPI policy. It is a matter between the hire purchase company and the bankrupt where the bankrupt decides to continue making payments towards the hire purchase agreement. The official receiver should make it clear to the bankrupt that any payment received under a successful PPI complaint will be paid in full to the official receiver, as trustee, for the benefit of the bankrupt’s insolvent estate and this will apply even where the bankrupt continues to make PPI payments post bankruptcy as part of the hire purchase loan.
[Back to Part 2 – Action to be taken] [On to Part 4 – Realising PPI on secured and unsecured borrowing]