The outcome of a recent case in the Court of Appeal suggests that IVA firms will still be allowed to collect PPI after an IVA has been completed and the completion certificate issued.
The decision by the Court of Appeal in the case of Green v Wright overruled the initial high court decision that that the proceeds of a PPI claim made AFTER the IVA completion certificate was issued, should be made available to the debtor. On the contrary the court determined that the successful completion of the IVA and the issue of a certificate had no effect on the availability of the PPI claim proceeds to the creditors bound by the IVA.
This is quite a complex issue and difficult to understand if you are someone who is in or has completed an IVA and are considering claiming mis-sold PPI. It comes down to understanding what the terms and conditions of your IVA state. The court is suggesting that in certain cases all ‘unrealised assets’ of a debtor at the time the IVA will be made available to creditors which would include the PPI refunds even though perhaps at the time they were not identified.
There are changes regarding making PPI claims which the FCA announced shortly after the Appeal Court decision was published which set the deadline of 29th August 2019 for PPI complaints to be submitted. This should at least put a line under this issue so that people do not feel like their IVA is dragging on indefinitely.
However the Appeal Court decision seems to raise as many questions as it answers. Apart from the understanding whether your IVA is one that applies in the same way as the Green v Wright case, what about the following scenarios:
1. The debtor has already received their PPI reclaim and may have spent all or some of it?
2. What if the IVA was a lump sum settlement full and final IVA or was settled part way through with a lump sum?
3. What if someone’s IVA failed part way through?
The situation is far from clear and this ruling does not mean that all IVAs will be subject to the same ruling regarding the proceeds from a PPI claim. In fact some funds from agreed PPI reclaims are still sitting with lenders who are not sure who they should pay the money to; the debtor, the PPI Firm or the IVA Firm. The likelihood now however is that funds held with lenders will go to PPI firms and not to the debtor.
This will be unwelcome news to debtors who will feel that the initial PPI payments may have contributed to their initial debt situation and that the timing of the unravelling of the IVA/PPI saga is at least a little cruel if not unfair.