The Royal Bank of Scotland could face a bill running into millions of pounds over its refusal to pay out successful PPI mis-selling claims to people who have been insolvent. In a long-awaited ruling at the Court of Session, judges threw out an appeal by RBS against an earlier ruling which could help thousands of people who have been refused payouts.
After a five-year battle, the bank has been told it must pay refunds and interest on payments even in respect of customers who previously owed the bank money, but whose debts have been discharged.
Industry sources say lawyers specialising in financial claims have thousands of similar cases on their books awaiting the court's ruling. One insider said: "I know of three firms who just between them have people on their files who are due £10m for claims which have already been upheld."
When all claims are taken into account, RBS could be forced to distribute hundreds of millions of pounds in pay-outs it had hoped to avoid, he said.
The case heard at the Court of Session relates to a Mrs Alison Donnelly, who borrowed money from RBS between 1997 and 2003. She was also sold payment protection insurance.
In 2006 Mrs Donnelly became insolvent and signed a trust deed appointing a trustee to resolve her estate and use assets to pay off her debts. Creditors, including the RBS received payments, but only around a fifth of what they were due.
Under the terms of the 1985 Bankruptcy Act, once this was done, with her estate distributed and the trustee paid for their role, Mrs Donnelly's debts were legally discharged in full.
However when she subsequently put in a successful claim – along with millions of others – over having been mis-sold PPI, the bank refused to pay.
Having agreed to settle her claim for £
0 Comments