PART 4
DECEMBER 2012
REALISING PPI ON SECURED AND UNSECURED BORROWING
31.9A.66 Scope of part (amended August 2013)
This part provides guidance on realising a PPI policy mis-selling complaint where the insurance has been taken out in relation to both secured and unsecured borrowing, including a mortgage, credit card, store card, or unsecured personal loan.
See Annex E for a flowchart showing the process for dealing with a PPI complaint.
Where there was a mis-selling complaint in relation to a PPI policy taken out on a secured loan and The Service’s agents were instructed prior to September 2013, see Part 3.
31.9A.67 Saving questionnaires to wisdom (amended August 2013)
A separate questionnaire (Annex B) should be completed for each PPI policy (see paragraph 31.9A.25 to 26), and a copy of each PPI questionnaire should be saved in the Wisdom electronic case file.
31.9A.68 Entering PPI enquiries onto ISCIS
A note should be made on ISCIS under ‘Other (General)’, that PPI enquiries are still ongoing following the return of the questionnaire from the bankrupt.
31.9A.69 The Service is not using agents for pursuing PPI complaints on unsecured debts (amended August 2013)
The Service does not have a contract with an agent to pursue PPI mis-selling complaints in relation to unsecured debts and from September 2013, The Service’s agents are no longer dealing with PPI claims relating to secured debts. The official receiver should decide on a case-by-case basis whether it is worthwhile to pursue a complaint, see paragraph 31.9A.70.
Where a decision is made to pursue a complaint, see paragraphs 31.9A.72 to 77.
31.9A.70 Deciding whether to pursue a PPI complaint relating to a secured or unsecured debt (amended August 2013)
The official receiver should consider the net benefit to the estate in pursuing any potential PPI mis-selling complaint, i.e. the value of any potential compensation that would be received by the estate after applying set off against any provable debt held by the financial institution from which the compensation is due [note 1]. See Part 5 for guidance on right of set-off. Set off is not normally applicable with secured loans, see paragraph 31.9A.85.
After application of set-off has been considered, then recovery should be pursued by the official receiver as trustee of the bankrupt’s estate. Set-off should not be a deciding factor when considered whether to pursue a claim, as not all financial institutions are applying it. A list of financial institution’s responses to whether or not they intend to apply set-off can be found on the Technical Section intranet site.
31.9A.71 PPI mis-selling complaint where there are other assets in the bankrupt’s estate (amended August 2013)
It may be that the estate has other assets which are sufficient to generate a dividend to creditors after the payment of bankruptcy expenses, but the PPI complaint is not estimated to have a net benefit to the bankruptcy estate after set-off is applied. Recovery should still be pursued on the basis that the respective financial institution’s provable debt will be reduced by reason of set-off, resulting in an increased dividend to other creditors. This is also applicable when set-off is applied to reduce a secured debt, as it may result in a reduction of the monthly mortgage payments or more equity in the property.
31.9A.72 First stage complaint process – Financial institutions complaints procedure (amended August 2013)
Once the PPI questionnaire(s) (see paragraphs 31.9A.25 to 26 and Annex B) has been completed and a decision is taken by the official receiver to pursue the complaint (see paragraph 31.9A.70), the questionnaire should be sent to the respective financial institution with a covering letter requesting that they investigate the complaint and forward any compensation payable for the benefit of the bankrupt’s estate.
Most financial institutions have a dedicated email or postal address for PPI queries detailed under their complaints procedure which is available from the ‘contact us’ section of their website. If there is not a dedicated PPI address, the official receiver’s letter of complaint enclosing the questionnaire should be addressed to the complaints department. A list of financial institutions PPI departments can be accessed by clicking here.
31.9A.73 Response received from financial institution
The financial institution should respond to the questionnaire (Annex B) generally within 8 weeks, although some institutions have been granted more time by the Financial Ombudsman to deal with complaints.
Where the financial institution responds accepting the PPI mis-selling complaint, then the monies should be requested and credited to the bankruptcy estate.
Where the financial institution responds refusing the mis-selling complaint, and the letter confirms that this is their final response, then the official receiver should consider whether to forward the matter to the Financial Ombudsman for review (see paragraph 31.9A.74 below). Any referral to the Financial Ombudsman must be made within 6 months of the financial institutions final response (see paragraph 31.9A.75).
31.9A.74 Second stage complaint process – forward complaint to Financial Ombudsman (amended August 2013)
The Financial Ombudsman will not look at a complaint for mis-selling PPI until after the complaint has first been addressed by the appropriate financial institution, see paragraph 31.9A.73. If the official receiver receives an unsatisfactory response from the financial institution following a request that the selling of the PPI to the bankrupt is investigated, consideration should be given to forwarding the matter to the Financial Ombudsman for consideration. There is no minimum amount for which a claim should be pursued.
The official receiver should send the case to the Financial Ombudsman if it is considered that the bankrupt has a valid complaint taking into account the financial institutions response to the complaint, and whether or not it is going to produce a net benefit to the bankrupt’s estate (see paragraph 31.9A.70). It should be recognised that pursuing a complaint to the Ombudsman involves the official receiver sending one further letter, and is part of the complaints process.
31.9A.75 Second stage complaint process - forward complaint to Financial Ombudsman within 6 months
Where the official receiver wishes to refer a complaint to the Financial Ombudsman following an unsatisfactory final response from the financial institution, the complaint must be made within 6 months of receiving the final response. The final response to a PPI mis-selling complaint must specify that if the complainant wishes to, he/she can take their complaint to the Financial Ombudsman, and that there is a 6 month deadline for doing so. See paragraph 31.9A.10 to 12 for exceptions to the time limit.
31.9A.76 Sending complaint to the Financial Ombudsman
If the official receiver, as trustee, decides to send the complaint to the Financial Ombudsman for review, the official receiver should send a covering letter enclosing the bankrupt’s completed questionnaire and the response from the financial institution concerned (see paragraph 31.9A.25 to 26 and Annex B).
The letter should be sent to:
Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London
E14 9SR
Any queries on the complaint’s procedure can be made by telephoning the consumer helpline on: 0300 123 9123.
31.9A.77 Financial Ombudsman’s reply (amended August 2013)
The Financial Ombudsman will review the information sent by the official receiver, and may write to the financial institution involved requiring them to provide further information. The Financial Ombudsman’s website indicates that it may take over a year to reply to the complaint, but the official receiver need not take any further action other than monitoring the case for a response.
Where the Financial Ombudsman responds to the official receiver indicating that a PPI mis-selling complaint for compensation is unsuccessful the official receiver should take no further action.
However, where the Financial Ombudsman finds that a PPI policy was mis-sold, the Ombudsman will instruct the financial institution involved to make an appropriate compensation payment for the benefit of the bankrupt’s estate.
[Back to Part 3 – PPI on secured borrowing] [On to Part 5 – Right of set-off]