In March 2017, the Court of Appeal decision in the Green v Wright case was published: Mr Wright’s IVA firm was allowed to collect PPI after his IVA ended, even though he hadn’t consented to this before his completion certificate was issued.
As questions about this continue to arrive, I thought it would be useful to summarise the current situation: what is clear and what is less clear.
The Court of Appeal decision
The full decision is here: Green v Wright verdict. Here are some articles on the decision by some of the lawyers that have been involved:
- Paul French’s blog: PPI claims survive completion of IVA for creditors (he was the barrister for the IVA firm in the Appeal);
- Kathryn Maclennan’s blog: Green -v- Wright: complete does not necessarily mean complete (she was the solicitor for the debtor in the original court case).
Before you read on:
I am not a lawyer and I can’t give you advice on what you should do. When I say things like “I cannot see” or “This seems very unlikely”, I could be wrong. I am giving a layman’s opinion, hoping it will help you to consider your own situation.
If there is a large refund involved, you may want professional advice. You can go to your local Citizens Advice or a Law Centre – that would be free – or you may prefer a solicitor with experience in personal insolvency. If you decide to go to court over this, you have to consider that if you lose you may have to pay not just your own legal costs but the other side’s as well.
Common misunderstandings
Here are some points that keep cropping up which are worth emphasising:
“My PPI was for a debt that wasn’t included in my IVA as it had been repaid”
This doesn’t make a difference. You had the right to reclaim PPI at the point your IVA started and it is this right which is an “asset” of your IVA even if you didn’t realise it.
“My IVA says that it includes windfall assets received whilst IVA is open, but it is now closed”
This is a standard clause in most IVAs but it isn’t relevant to the PPI issue. PPI is not being claimed as a windfall. PPI is being claimed for your creditors because the right to make a claim was an asset you owned at the start of your IVA, this has nothing to do with the windfall clause.
“They will try to get any money I inherit – this is never going to end!”
This isn’t going to happen. An inheritance (or lottery win, or taking money from your pension etc) is treated as windfall if it happens during your IVA. But after your IVA ends the money is yours if one of these events happens. The court case doesn’t relate to windfalls at all.
“I would have been better off going bankrupt”
That may be correct. But PPI isn’t relevant to this – if you had gone bankrupt all the PPI would have gone to the Official Receiver.
“It’s not fair because this wasn’t explained to me at the start”
When your IVA started no-one had any idea that this court case would happen. You can’t blame your IVA firm for not telling you something they weren’t aware of.
“This only applies to PPI”
I would expect it to apply to other similar “refunds” eg for payday loan affordability cases, pension mis-selling etc. The principal is that you had the right to make a claim at the start of your IVA, even if you were not aware of this at the time.
The simplest cases
“My IVA hasn’t finished yet”
If your IVA is still in progress then your IVA firm has the right to collect this PPI. If you refuse to co-operate with the claims company they appoint, you could be in breach of your IVA terms by refusing a reasonable request and your IVA may be failed.
“I have made my last payment but they won’t give me my completion certificate unless I agree to them collecting the PPI afterwards”
If you don’t sign they will keep your IVA open until they are happy they have collected all the PPI, which could be years. It’s your choice, but I can’t see any options which will let you get the PPI money.
“I had to sign documents authorising them to collect PPI before I got my completion certificate”
Many people in the last few years have been asked to sign a deed of assignment saying that any PPI paid after their IVA completed should go to their IVA firm. The Court of Appeal case doesn’t change this.
In any of the above situations, the PPI is going to your IVA firm, I can’t see anything sensible you can do to stop this and there isn’t much point in you reading the rest of this article.
Mr Wright’s IVA used R3 standard terms and conditions
The Appeal Court decision was that Mr Wright’s IVA created a trust which did not end with the completion of the IVA unless there was specific wording to state it ended. This wording wasn’t in Mr Wright’s completion certificate.
The Appeal Court decision was based on the specific terms and conditions of Mr Wright’s IVA, which in his case had used the R3 standard terms.
If you aren’t sure if your IVA used these terms, ask your IVA firm or dig out your IVA documents. If you see Produced by the Association of Business Recovery Professionals this is an R3 IVA. Anything that says Consumer IVA Protocol is not an R3 IVA.
Let’s look first at the situation if you have an R3 IVA, then at how this may change if you don’t.
For people with an R3 IVA
If your IVA used the R3 terms, you should assume the Appeal court decision applies to you. It is highly unlikely that your completion certificate would have had any wording to bring the IVA trust to an end. The same argument – that specific wording is needed to end the trust – is likely to apply even if your IVA completed with a full and final settlement or failed.
Claims which haven’t yet been paid out
If a PPI complaint is upheld, it is very likely that your bank will ask the IVA firm if they should have the money, the IVA firm will say Yes (because of the Court of Appeal decision) and the bank will pay it to them. If this happens there is very unlikely to be anything you can do to challenge this.
Thinking about some possible exceptions:
- if your IVA is so old that your IVA firm can’t be located, I think the bank will eventually send you the money. See A PPI claim after an old failed IVA for details.
- If your IVA is so old the firm no longer has enough records for it to be able to distribute IVA to your creditors, it may be happy for the money to come to you. If you have an old R3 IVA you could enquire about this.
- If your creditors have been paid in full, the money should come to you. You are entitled to ask your IVA firm for an account which shows how much money has been distributed. If you are thinking you may be near the full payment point because a lot of PPI has already been reclaimed, don’t forget that a large proportion will have been taken by the claims firm and not gone to your creditors.
Will your IVA firm be trying to reopen old cases to reclaim the PPI? That is likely to depend on the firm. I have heard that some firms don’t intend to reopen these cases, but if you start the complaint, they will claim the PPI.
If your IVA firm wants to reopen your old case and asks you to sign something to allow them to reclaim the IVA, it isn’t clear that they have any sanctions against you if you refuse. If they mention the Green v Wright decision, you could ask them what will happen if you don’t sign.
You could also propose a solution in which you split any PPI reclaimed – half to you and half to the IVA firm. If your IVA firm agrees to this, you need to get it very clearly in writing. Also you do not want their claims firm making the complaint and taking a huge cut first – offer to make the complaint yourself.
PPI has already been paid to your IVA firm
There is nothing you can do about this.
PPI has already been paid to you
If you have spent the money, this is a very worrying situation. It seems unlikely that an IVA will be aggressive in this situation – who should it pursue, you or the bank who sent you the money? And if you don’t have any assets, it’s hard to see how pursuing you could produce any gain for the creditors. Don’t let yourself be pressured into doing anything silly like trying to borrow this money to hand to the IVA firm – just explain your situation.
For people with non R3 IVAs
There is no legal clarity for non-R3 IVAs. There hasn’t been a court decision on any of these cases and they can have very different terms. Some could be close to an R3 IVA in the areas that matter, but some may not be similar.
It seems unlikely this is going to change. It is hard to imagine a debtor is going to want to go to court, given the costs that Mr Wright has ended up with after losing his case.
In most respects similar points apply to those on the R3 case above, except the IVA firm itself is on less solid legal ground. You may decide that they are largely bluffing… but this still isn’t a very comfortable position for you to be in. If you feel you are being pressured unreasonably, put in a formal complaint to the firm and then to the IVA Complaints Gateway.
IVA firms may take different views.
- Some may choose not to try to reclaim PPI after a completion certificate has been issued if no deed of assignment has been signed.
- Some may try to reclaim, but it isn’t clear what possible sanctions they have if you refuse to co-operate. In 2018 and 2019 ClearDebt and Aperture have been sending out some letters that some customer feel are threatening about allowing the firms to make PPI and other financial claims for IVAs that have completed or have failed some time ago. See Aperture (previously called Grant Thornton) sending PPI letters after IVA completion for what your options are.
- If you try to reclaim PPI, it seems pretty likely that the bank may pay it to your IVA firm.
- Some firms may agree if you offer to split the PPI.
- If PPI has been paid to the debtor and spent, again it seems unlikely that the IVA firm will pursue this aggressively.
Comments
You are welcome to comment below but I cannot guess what your IVA firm will choose to do and I am not going to speculate.
After the Appeal Court verdict in March 2017 this article was re-published with up-to-date information.
Paul says
Dear Sir or madam, l am sending you this message as I at the time I did have an IVA account with you which was dealing with my debts I had then. This was back in 2006 to 2011 but on completion I was sent a statement of it being completed during that period. I would like to request a letter concerning this if it is possible from you for me. Yours faithfully, P Turner. Account number 905935.
Sara (Debt Camel) says
You need to send this to your IVA firm. Not post it here.
Lyn says
Hi hoping you can advise
We had an Iva which finished in 2015 majority of ppi went to the Iva we had one with RBS and Iva people said no interest in money so rbs have kept it against the debt we had after the Iva are they allowed to do this
Sara (Debt Camel) says
yes, this is what commonly happens.
Lyn says
Left message last week haven’t had a response yet regarding an Iva and ppi, Iva company not interested but the bank have kept the money to pay off the debt that was in the Iva is this allowed
Even though the debt should have gone with the IVA
Sara (Debt Camel) says
As I said, this is what normally happens in an IVA and in a DRO. Although legally you are right that the debt no longer exists. If you take the complaint to the Ombudsman, the Ombudsman usually decides that what the firm has done is fair I am afraid.
Lyn says
Hi
The company that was trying for the ppi are now charging us even though we didn’t get the money they are saying because it’s been used to pay the debt owed we have been paid out so now we have to pay them can you advise please
Sara (Debt Camel) says
is the claims company FCA approved?
Did they ask if you had had an IVA?
Andrew says
What happens if the iva has been paid off but the debts were in mine n my ex-wife name , these have all been paid off . My ex-wife wasn’t in an iva . But they want me to sign a form to claim the PPI outstanding, but my point is , surely they won’t be able to claim it as in both our names . And why legally should they get it all when my ex-wife wasn’t in a iva . Surely half of it is hers if they successfully get any
Sara (Debt Camel) says
Your ex should be entitled to get her half of the PPI on joint accounts. I suggest you tell the IVA firm this and say you want them to confirm this in writing before you sign the form.
Michelle says
If the IVA was finished over 6 years ago and nothing paid since doesn’t that make them statue barred so really the debts are wiped and the ppi money should go back to the client
Sara (Debt Camel) says
No that’s not how these refunds work. A debt legally exists even if it is statute barred. So PPI can be offset against it.
CG says
I had an R3 IVA and it was completed (with certificate) in Jan 2018. Due to the R3 wording, I have had all of my PPI / mis sold claims since that date continue to be claimed in full by the IVA managers to go towards any outstanding costs / debts claimed on the IVA.
I wanted to know how much liability was remaining on the IVA (i.e., if I continued to have PPI / mis sold claims paid in, at what point would they fulfil the debt), so I asked the Insolvency Practitioner. They came back with a figure that had added a further 50% of the amount that I had originally agreed for the IVA.
Is this the correct amount / normal practice?
Sara (Debt Camel) says
The amount you agreed to pay in your IVA (eg 60 payments of £160 a month) isn’t relevant here. The firm will carry on collecting more money for the creditors until all your debts have been paid in full plus the IVA firms fees..
CG says
Thanks.
For example, (using round figures for illustration) let’s say that the whole IVA originally agreed was £50k, and £30k was paid back before it finished/formally completed. £15k of other claims have been paid through PPI / mis sold claims since the end of the IVA (due the R3 terms), but the Insolvency Practitioner (IP) are now stating that the amount for the final debt to be cleared is another £40k on top of what has already been paid. So the IVA has been increased from £50k to £90k, without formal notification or agreement, even though £45k has been paid back on the original debt.
I thought that the debt was the agreed amount at the beginning of the IVA (rather than the actual amount paid by the end of the term), which included the fees, but not the interest. If I pay the amount quoted by the IP, I will have completely the original agreed amount, plus more than 50% of that amount on top: that implies that the fees imposed by the IP are a further charge of 50% of the original agreement and fees. I am struggling to see that as an acceptable level of interest / fees to be charged for an IVA.
Sara (Debt Camel) says
£15k of other claims have been paid through PPI / mis sold claims since the end of the IVA
If those were the refund values, you have to take off the claims companies’ high fees. And then the IVA firms pockets some more.
Plus your IVA may say that in a final settlement, statutory interest is added – that is 8% per year on your debts.
The whole thing is pretty outrageous.
CG says
In terms of the example, £15k is the amount credited by the IP after the claims companies fees, not before.
Statutory interest of 8%per annum is comparatively fine, but fees that equal more than the original IVA do not seem to be appropriate. Is that legal?
Sara (Debt Camel) says
Ask them for a breakdown of how that has been calaulated.
Kevin says
I have been contacted by my iva firm, that because my IVA was completed in 2010 that most of my creditors didn’t collect so there’s a large surplus for me to now, and legally I can have back, is this correct?
Sara (Debt Camel) says
Yes it probably is.
It is always possible – but very unusual – for someone to get a cheque after their IVA has finished as a creditor didn’t claim the money they were owed – see https://debtcamel.co.uk/iva-uncashed-dividends/
But in this case, where the IVA firm is trying to contact creditors about an ancient IVA, it is much more likely that the creditor swill simly have no records of you or the IVA any more and so they have no idea what the IVA firm is talking about. the IVA firm can’t keep this money so it has to go back to you. Unfortunately the IVA firm will have decuted its large fees – this is why they have been going through the PPI reclaim process. But you should get money back.
If they send you a cheque, fine. Of course if they are asking for your bank details, do be sure you are being contacted by the IVA firm, not a scammer… it’s probably fine but better safe than sorry.
Nathalie says
Hi Sara,
My IVA has completed and I’ve been asked to sign paperwork to permit my creditors to have any PPI any payments due after completion. I think I claimed PPI either before or start of my IVA. Does this count or is it only after completion?
Sara (Debt Camel) says
Have you already been paid the PPI refund?
Nathalie says
Yes I think so. A company claimed for me so they took a percent of it. I have no idea how much was paid though.
Sara (Debt Camel) says
If your refund was before the IVA then it is irrelevant. If it was during the IVA , you should have told your IVA firm.
It sounds as though you are being asked to sign something that relkates to payments you have not yet received… if you aren’t sure, talk to your local Citizens Advice and they will look at it for you.
Ms Vx says
I completed my IVA 6 years ago.
My original debt to creditors was £40000. Over a 6 year period I paid a total of £34,000 (£475 per month).
I was subsequently contacted by my IVA trust 3 years ago to say they had appointed a claims management company to pursue old PPI claims. Any recovered claims would still go into my IVA estate but as a goodwill gesture the iVA trustees would pay me any recovered statutory interest minus costs.
I have just heard from an old creditor that I have a successful case of £16,000. Of this total amount approximately £9000 is the gross interest calculation. Will I be entitled to now receive this £9000?
I also remember that when my iVA was still active, there was a PPI claim from another creditor which also went into my IVA. This was around £14,000. Am I entitled to claim for the statutory interest on that historic payment even though that went straight into my IVA estate at the time ?
Considering my original debt of £40000, the payments I have personally made of £34000, the historic IVA payment of £14,000 and now this new PPI claim of £16000, this means over £64000 will have been paid into my IVA estate. This is £24,000 more than my original debt. I am fully aware that costs are involved in administering an IVA, but surely I will be entitled to something back.
Can you please help.
Thanks
Sara (Debt Camel) says
Any recovered statutory interest minus costs.
This normally means they will deduct the claims management companies high fees and sometimes a charge they make. But from 9k I would hope you should get at the very least 3k back.
You can also ask your IVA firm to produce an account showing whether your IVA has yet been paid “in full” yet.
Ruth Swann says
Hi . I’m at the end of my iva . They want me to sign a form allowing them ppi . But they have already had the ppi I accrued. I know there is no more .
So if I sign this form does this mean any ppi from now into the future will be theirs?
Sara (Debt Camel) says
yes. But why do you care if you know there isn’t any more?
And if you don’t sign they can just hold up completing the IVA until they are satisfied there are no further amounts that could be collected – do you want to wait another year or two?