Reclaiming PPI whilst in a Trust Deed

5th October 2011

In April 2011 the High Court ruled that banks should repay billions of pounds of cash collected from mis-sold payment protection insurance (PPI) policies. For a long time, many major lenders had been putting off dealing with these claims by using a variety of delaying-tactics, but this decision cleared the way for claims to proceed. So, if you are in a trust deed should you make a PPI claim?

In general, even if you have a trust deed, there is nothing to stop you from making a PPI claim yourself or by using a claims management company. However, a recent report by BBC’s Watchdog programme has highlighted the problems with some claims companies who pocket your fee but don’t always deliver on their promises.

Watchdog found some claims management companies are breaching the Ministry of Justice rules (that apply elsewhere in the UK) by claiming telling clients that, as a claims management company, they can increase the client’s chances of:

Receiving a refund
Getting their money faster
Maximising the money they receive

None of these claims are necessarily true. A claims management company can only act as an intermediary for a client by contacting the bank or Financial Ombudsman on the client’s behalf. They cannot necessarily do anything that you could not do yourself. Tony Boorman from the Financial Ombudsman told Watchdog: "If you want to make a complaint about payment protection insurance it really is straightforward and it's certainly something that I'd advise you can do yourself”.

Another reason to avoid using a claims management company is that the fact that you are in a trust deed almost certainly means that you will not receive, or will not be able to keep, your PPI payout. The risk is that you are saddled with the success fee while your trust deed swallows up the lump sum you would need to pay it.

If your trust deed means that you cannot keep a payout, is it worth making a claim? It will really be of no direct benefit to you. However, many trust deed users do not wish to see those companies that have been mis-selling PPI benefit from their actions. A successful claim is likely to see creditors who did not engage in these poor practices benefit (to some extent) to the detriment of those that did when the trust deed dividends are finally paid.

A minority of trust deed companies insist that they will organise a PPI claim on your behalf before your trust deed is completed. They see the potential payout as a possible asset that could help repay your creditors. You may or may not be happy that this will be the case and, for some people, it will influence their choice of trust deed provider.

Recently we heard a case where a client had been discharged from their trust deed and then went on to make a PPI claim on a mortgage she once had. To her delight she was refunded £50,000! In this instance she could keep the money as she had been discharged from her obligations under the trust deed.

So should you make a PPI claim during your trust deed? We’d suggest that you do not do so without first discussing it with your trust deed firm. We’d also suggest that you do not use a claims management company. Finally, you should be aware that it isn’t going to provide you with a sum of money that makes life more affordable for you during the term of your trust deed. It may however help to see that justice is done in terms of creditors not profiting from poor practice.

For more helpful advice about making a PPI claim whilst in a trust deed, or to find out more information about living with a trust deed, visit www.Trust-Deed.co.uk. The site is run and maintained by professionally qualified debt advisers. You can even use the trust deed forum to speak to experts and others who have been affected by debt about their trust deed experiences. Visit the website now or call the trust deed experts on 0800 043 7201.

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Reclaiming PPI whilst in a Trust Deed

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