Can I Claim Back PPI After A Trust Deed In Scotland?
Last Updated: 23rd November 2018
You’ve been discharged from your trust deed in Scotland. Can you reclaim PPI (payment protection insurance)?
The answer is… it depends.
Has Your Trustee Been Discharged?
Trustees are the insolvency practitioners who handle a trust deeds. They check if PPI claims can be made for their clients. PPI claims can raise more money to repay your creditors.
Trustees will try to do this before you are discharged. However, they may remain “in office” to carry on with this work after your discharge. You are discharged from the trust deed, but they are not. They’re still working to complete your case, which may include PPI claims.
If they’re “in office” still, and a PPI payment is made, the money goes to your trust deed. This is true even if you have been discharged.
You can search the “Register of Insolvencies” to see whether both you and your trustee have been discharged.
If you have both been discharged, and your PPI claim is won, you may receive the cash.
Should You Use A Claims Firm?
We strongly advise you not to use a claims firm. There are three main reasons:
- If you win and get the cash, the claims firm will keep a large chunk of it.
- If you win but the ex-creditor “sets-off” the payment, you’ll get no cash. You may still have to pay the claims firm, which could be very expensive. See the “Creditor Differences” section of this article below.
- It’s easy to make a claim by yourself. We like the PPI claims tool on Which? It can write the letters for you. If the bank refuses to pay, you can use the Financial Ombudsman Service for free.
RBS (at the time of writing) believes they can “set-off” PPI claims. They’ll keep the PPI money to repay any of your former debt (that was written off).
NRAM (Northern Rock) have been reported as doing the same.
Is this allowed? In January 2017 the Court found against RBS. It stated they should not set-off PPI claim money against written off debts. RBS had won previous Court cases on the same topic.
RBS could take this to a higher Court to appeal the ruling against them. They appear to have been waiting for the Supreme Court ruling on another PPI case.
The Supreme Court has recently made this ruling. The outcome does not appear to be favourable for RBS. We presume that they are taking legal advice about their position. We understand that they are still applying set-off.
Shouldn’t all banks be subject to the same rules? The issue is that the rules have not been clear. Different banks have taken different positions due to this lack of clarity. Different legal advisers have taken different positions. The Courts have made decisions which were later overturned.
As at November 2018, we do not know if RBS will seek to appeal the January 2017 decision. We do still hear that they are setting-off PPI payments.
Some trustees have tried to reopen trust deeds. This has happened if both you and they are discharged from your trust deed.
Made aware of large PPI claims, they’ve tried to recover the funds for creditors. This also presents a fee-charging opportunity for the trustee. These attempts have happened after they, and their client, have been discharged.
The Supreme Court has recently found that a trustee cannot reopen a case on this basis. It did express some frustration at this outcome. The PPI money clearly “should” have gone to the trust deed creditors, but the law doesn’t make this possible. As such, the money should go to the former debtor instead.
The Supreme Court added that a different legal argument could have been made. It implies that this argument might have resulted in a different ruling. It applies if the “final distribution” to creditors could be seen as a mistake. The mistake would be that other assets (like PPI) should have been gathered in for the creditors.
In theory, a trustee could apply to the Court for a “reduction”. This process could effectively cancel the “final distribution” of the trust deed because it was mistaken. If that was cancelled, a new opportunity to gather in any PPI money might be created. This is as yet untested. We don’t know if any trustee will seek to test it.
Trustees Holding PPI Payments
Some trustees have been holding on to PPI payments for ex-clients. They’d been hoping the Supreme Court would find they could reopen trust deeds. This case has been lost.
They now need to decide what to do with the funds. They could forward the money to their ex-client. They could send the money back to the bank, which may then pay the ex-client directly. Or they could hold the money while they consider other legal options.
We do not know how such trustee firms will now proceed.
One firm, reported in our forum, is asking ex-clients to allow them to keep part of the PPI. This deduction may be to help cover the trustee’s legal and admin costs.
Some people might accept this, to ensure that they quickly receive a sum of money. Some people might accept this, in case a new legal route to reopen trust deeds is later found.
Others might consider this to be plain wrong. They didn’t ask the trustee to take legal advice. They didn’t ask the trustee to administer payments. They no longer have any contractual relationship with the ex-trustee. No fee agreement exists. The trustee has brought no benefit to creditors. Other trustees are not doing the same. There is no shortage of arguments against a trustee charging in this scenario.
We apologise that we cannot give you direct advice about PPI claims after a trust deed.
We are not authorised to give claims advice. Many of the issues raised are legal matters. We are not trained or authorised to give legal advice.
You may wish to visit our forum. This issue is discussed frequently there. General guidance and information is shared by experts, but it is not personal advice. Forum members share their own experience and views on the subject.
For personal advice you should contact a free law centre or appoint your own solicitor.
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