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RBS and PPI Claims After Trust Deeds

Last Updated: 23rd November 2018

The Usual Position

PPI claim money may come to you if you’ve been discharged from a trust deed. Your trustee will need to have been discharged as well.

If the trustee has not been discharged, the money will usually go into your trust deed.

You can read more about this general subject (and some challenges and exceptions) here. This page is written specifically about the “set-off” position adopted by a small number of banks.

RBS Set-Off

The Royal Bank of Scotland Group takes a non-standard approach with PPI after a trust deed. This group incorporates banking brands such as RBS, NatWest and Ulster Bank.

While accepting that PPI claim payments might be due, their position has been that they’re able to retain this money to set if off against debts that were owed to them when the trust deed began.

We have heard that NRAM (Northern Rock) has taken a similar position.

How can “set-off” apply where a debt has been legally written-off upon the successful completion of a protected trust deed? What exactly is RBS setting the PPI repayment against?

From correspondence we saw in 2014, we understand that the RBS argument and position was:

“The Scottish equivalent of “set-off” rights is known as “balancing accounts in bankruptcy”. In the scenario we’re considering here, a protected trust deed is viewed as being equivalent to bankruptcy.

A “person” with a claim against an insolvent estate (a claim which arose prior to bankruptcy) can keep any money owed to the insolvent estate.

They consider that any goodwill payment that they now offer for PPI arose pre-insolvency. This is because the date when their claimant contends they became entitled to be compensated or refunded was when the original mis-selling took place.

Reciprocal obligations existed when the trust deed was signed. Any detriment or loss to the customer can be quantified in monetary terms at this date.”

The Courts

In January 2017 the Sheriff Appeal Court overturned previous RBS legal victories in this respect.

RBS then appears to have put the matter on hold.

A Supreme Court judgment was awaited on a separate PPI and trust deed case. The outcome could be relevant to whether they appealed their own case. That Supreme Court judgment was published in November 2018. The outcome initially appears to be unhelpful to RBS.

However, RBS retains the right to take an appeal to a higher Court.

The Current Position

Our forum members tell us that RBS is continuing to set-off PPI against debt that was written-off by trust deeds in the past.

From a non-legal perspective, it’s hard to see how this position is sustainable.

It seems likely that RBS will change their policy in due course, or that they will instead return to the Court to argue their case again.

Getting Advice

We apologise that we cannot offer personal advice on this subject. It’s legally contentious and we are neither legally trained nor regulated to give legal advice.

General advice and information is available in our forum. This subject is discussed often there.

You could obtain your own legal advice. A free law centre may be able to help you. You could also appoint a solicitor.

You also have the right to take a dispute with a UK bank to the Financial Ombudsman Service.

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