Can I Claim Back PPI After A Trust Deed In Scotland?

Is it possible to reclaim PPI after you’ve been discharged from your protected trust deed? 

This might seem like a simple question for which there should be a straightforward answer. The reality is a little more complicated.

Let’s start with the basics…

Trustees (the insolvency practitioners that handle trust deeds) have been instructed to look into whether PPI claims can be made for their clients. This will raise more money to help repay the creditors of their clients. Trustees will sometimes handle this process prior to your discharge. However, it’s possible that they’ll “remain in office” to carry on dealing with your PPI claims after they’ve discharged you. This means that you’re discharged, but they are not. They’re still working on aspects of your case, possibly including PPI claims.

If that’s happened, and a payment protection insurance (PPI) payment is forthcoming, the funds will have to be paid into your trust deed even if you’ve been discharged. You can use the Register of Insolvencies to see whether both you and your trustee have been discharged.

If you have both been discharged, and potential PPI claims remain outstanding, you might be able to make a successful claim from which you benefit personally.

However, some creditors aren’t making it easy…

RBS had concluded that they can “set-off” successful PPI claims against the debts that you owed them previously (and which would have been written-off when you were discharged from your protected trust deed). This has caused some confusion and some anger amongst those who assumed that they would receive this money.

Can RBS do this? In January 2017 the Court appears to have confirmed that RBS should not have set-off PPI claim proceeds in this way, despite them having prevailed in previous hearings. However, this matter might yet be subject to further legal activity before a settled position emerges.

We’ve also heard some time ago that NRAM (previously Northern Rock) were refusing to investigate a claim. They apparently took the view that the potential to reclaim PPI “vested” in the trustee when the trust deed was signed and did not automatically transfer back to the debtor upon their discharge. However this line of argument may now be untenable given the comments of a judge considering another case related to payment protection insurance and trust deeds (another verdict that may well be appealed).

Shouldn’t all banks be subject to the same rules?

It’s easy to have sympathy with this viewpoint, but the reality is that there has been no rulebook for exactly how (and if) PPI claims should be dealt with in a post-insolvency scenario. This makes up a tiny percentage of the overall volume of PPI claims, so there has been little impetus to create a standard process.

Banks, trustees, and claims firms have obtained their own legal advice and taken positions based upon what they’ve been told. Different legal advisers have formed different views which continue to be tested in court.

As at January 2017, it seems as though the legal process to achieve clarity might continue for some time yet.

Some trustees aren’t making it easy either…

Some insolvency practitioners have been seeking to reopen trust deeds. This has happened when they’ve become aware of larger PPI claims, after both you and they have been discharged. They’re looking to collect in the money, charge for their work, and distribute the remainder of the funds to your former creditors.

A trust deed can only be reopened with permission from the court. At the time of writing this subject is legally contentious. Continuing legal actions will eventually determine for sure whether a trustee has any right to take this course of action. You can read much more about this subject in this article.

So what should you do?

We cannot provide specific personalised advice on making payment protection insurance (PPI) claims after a trust deed. Debt advisers and insolvency professionals have no training or particular competence in this area.

In general however there’s probably little to be lost (other than some time) by trying to make a PPI claim after you and your trustee have been discharged from a trust deed.

We’d advise you against using claims firms. If you get a payment they’ll take a large chunk of it. If your bank accepts liability but refuses to pay you (see the RBS comments above) the claims firm might still send you a bill for their “success”.

Some consumer websites offer template letters that you might find useful for making PPI claims yourself.

If the bank concerned refused to pay out (or refuses to investigate your PPI claim at all) as a result of your previous insolvency then you’ll have a decision to make. You could give up. You could take them on legally (remember this would likely be prohibitively expensive and you could lose) or you could hand the matter over to the Financial Ombudsman to make a ruling.

You might also wait for additional clarity following the completion of the current legal cases related to this issue. Any significant legal developments are being reported and discussed regularly in our forum.