Payment Protection Insurance (PPI) mis-selling is an issue which affects many IVA clients. To try to ensure a smooth process, ClearDebt have enlisted the services of DRSP Limited (DRSP) to assist in this investigation and the claims process and policies are laid out below.
Mis-Sold PPI Claims in IVAs
Under the Standard Conditions for IVAs and your specific Proposal, your Supervisor has an obligation to ensure that all available assets are realised for the benefit of your creditors.
Since any potential claim for mis-sold PPI is compensatory in nature and as such is classed as an asset of the arrangement, your Supervisor must investigate whether PPI is present on any of your current or previous debts and where it is, to establish whether or not it has been mis-sold.
To assist ClearDebt with this investigation your Supervisor has enlisted the services of DRSP, a professional claims management company who will thoroughly examine all possibilities that mis-selling has occurred and where it has, to ensure that the claim is maximised and realised for the benefit of the creditors within the IVA estate.
DRSP is the appointed agent of your Supervisor and you must assist them in their investigation.
Your Supervisor has agreed to pay DRSP a fee of 33.95% (inclusive of VAT) of all money realised for the estate. These fees will be paid from the estate – you have no liability for these fees whatsoever.
Why ClearDebt has employed an external company
Although claims for mis-sold PPI need to form part of your IVA estate, Licensed Insolvency Practitioners do not hold the requisite Ministry of Justice license to be able to submit a claim. In any case, claims for mis-sold PPI are not our speciality.
As the asset belongs to your arrangement, your Supervisor’s decision to enlist DRSP is one we believe that will benefit the IVA estate. The use of a professional organisation will ensure that all claims are investigated rigorously and ensure that creditors are made to pay the appropriate levels of compensation.
You cannot submit claims yourself
It is the opinion of your Supervisor that the use of a professional organisation will increase returns for your IVA estate and will ensure that all claims are investigated rigorously. Without a neutral party with the authority and infrastructure to be able to sufficiently report and approach creditors, your Supervisor can never be certain that assets have been fully recovered.
Which debts need to be included?
All assets must be paid into your IVA estate and as such it makes no difference whether or not the debt has been included within the IVA or otherwise. Accordingly, the types of credit agreement which will need to be investigated are:
- Debts within your IVA
- Loans, credit cards, store cards paid off prior to your IVA
- Current or previous mortgage or secured loan agreements
- Current or previous hire purchase agreements
- Any other type of debt where PPI may exist
DRSP will contact you by phone to arrange for a Claims Specialist to come to your house to visit you at your convenience. At the appointment they will go through all the documentation provided by ClearDebt and will also request to see details of any credit agreements or statements you have in your possession.
To facilitate a quicker response to the Review it will speed up the process if you can obtain a copy of your credit reference file in advance of this appointment via www.creditexpert.co.uk who provide a free 30 day trial.
If you do have policies which DRSP believe have been mis-sold your Supervisor has already given prior approval to them to request that you sign the required documents for a claim to be submitted against the creditor. From this point on creditors have 8 weeks to provide a written response to advise whether or not the claim has been upheld.
DRSP have ClearDebt’s full approval to use their own discretion in determining whether or not a policy exists or has been mis-sold. Where they believe a claim exists, a claim must be submitted for the benefit of the IVA estate.
The length of time it takes for the claims process to complete will vary. Although creditors should respond within 8 weeks of the initial letter of complaint, on occasion it will take creditors longer than this to respond due to the volume of complaints they have received.
Although both ClearDebt and DRSP will do everything possible to ensure a speedy conclusion to the process, this will not always be possible and will depend on the response times of your creditors.
DRSP will require you to sign Subject Access Requests forms and/or Financial Ombudsman complaint forms which will be sent to all your creditors to ascertain which of your current or historic accounts contain PPI and where applicable, to make a complaint where a policy may have been mis-sold.
If you are approaching the end of your IVA, it is possible that the investigation into mis-sold PPI may delay the completion of your arrangement. Unfortunately, due to a number of bank creditors’ incorrect application of set off, the previous assignment process is no longer possible. However, the investigation into mis-sold PPI is a necessary component of your IVA and everything that can be done to expedite the process will be done.
Consequences of not complying
As an appointed agent of the Supervisor, you are obliged to comply with DRSP and with the claims process. Failure to do so will constitute a breach of your arrangement which may lead to the termination of your IVA. No completion documents can be issued until this process has been completed.
Where a creditor makes an offer of compensation for mis-sold PPI, the offer is normally broken down into different segments. One of the segments relates to Statutory Interest of 8% per annum against the amount paid in premiums and interest – this segment is classed as income and accordingly will generate a tax liability.
Your Supervisor has agreed to make payments to HM Revenue & Customs on your behalf direct from your IVA estate at the lower rate of tax to cover this liability in instances where the deduction has not already been made by the lender. To do this we require your National Insurance number which has already been requested. If you have not yet provided this then please contact your ClearDebt administrator to do so as your Supervisor cannot make this payment on your behalf without it and the liability for tax will then be yours.
Benefits of the claims
After the fees for DRSP and any payment to HM Revenue & Customs has been deducted, your Supervisor will pay you the first £500 of the total claims recovered into the estate. This is purely as a goodwill gesture and will be paid at the point that all of your claims have reached their conclusion.
Additionally, given that claims can be quite substantial, there is the added possibility that the compensation could be sufficient to repay 100p in the £ of your debt plus statutory interest which not only would mean your IVA would potentially complete significantly earlier, but would also mean that any amount paid over and above this (after costs) would be yours to keep in full.
As always your administrator will be happy to assist you with any queries.