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Lawyers appalled by PPI C Bank Advice

Monday, October 08 11:43:15

Dublin based law firm McHale Muldoon, acting for over 1,000 clients who have been mis-sold Payment Protection Insurance (PPI) in Ireland are appalled by the advice given to consumers by the Central Bank this morning.

"Consumers of the firms undertaking the reviews do not need to do anything at this point; they will be contacted directly by their PPI seller in relation to the review process and next steps," said Mr Bernard Sheridan, the Central Bank's director of consumer protection.

The Central Bank however, claims that it is aware that a significant number of PPI related complaints and enquiries are being referred to firms by claims management companies on behalf of consumers. It is important for consumers to know that such companies charge fees and that the costs to the consumer can be significant.

"Complaints regarding the sale of PPI since August 2007 will be investigated by the firms listed as part of their reviews. All other PPI complaints must be dealt with in compliance with the 2012 Consumer Protection Code, including those relating to sales prior to August 2007," the Central Bank said in a statement this morning.

But, Michael Muldoon, Partner at McHale Muldoon, and who is leading these cases, dismissed this advice:

"If a consumer who was sold PPI in say October or November 2006 heeds the advice of the Central Banks and does nothing and their complaint is ultimately rejected (which is likely), it will be too late for them to submit their claim to the FSO and they have no avenues open for redress. This will play into the hands of the financial institution who are already delaying in dealing with complaints and are relying on the six year rule."

The main reason behind this view is what is known in the industry as the "six year rule". In the event that complaints are not upheld by the financial institution (and McHale Muldoon's data suggests that this applies 90-95pc of complaints) the next step would be to present a complaint to the Financial Services Ombudsman ("the FSO") for adjudication. As matters stand, the FSO has no jurisdiction to investigate cases where the sale of the PPI was conducted over six years ago.

McHale Muldoon has been instructed by over 400 clients who have been sold PPI by MBNA with credit cards and loans and has submitted claims to MBNA on behalf of the over 160 clients that have been sold PPI by the lender. MBNA have refused to provide a response to the vast majority of these claims. The Consumer Protection Code states that lenders must attempt to investigate and resolve complaints within 40 days.

Advice has also been given to consumers to avoid using third party firms to submit their claims. The vast majority of claims are not being upheld. The banks are hiring expensive lawyers and applying serious resources to defend these claims to avoid paying compensation. Of course, a consumer can present a complaint independently but there must be equality of arms. Consumers have a better chance of succeeding with expert assistance that ensures they get a fair deal. As well as that, many people simply hire others to do things they require assistance with. Further, in all cases, McHale Muldoon (as a law firm) endeavor to seek its fees from the bank so clients can retain all of their compensation.