Taxpayer-owned NatWest blasted over legal costs for new PPI cases
- NatWest – 62% state-owned – has been slammed for wasting taxpayers’ money
- It is thought to have spent in excess of £10,000 on individual court cases
- Judge S. Mitchell questioned why it was spending so much defending a PPI claim
Natwest has been slammed for wasting taxpayers’ money on hot-shot lawyers to crush new payment protection insurance claims.
The bank – 62 per cent owned by taxpayers – is thought to have spent in excess of £10,000 on individual court cases to battle customers who believe they were mis-sold PPI.
In a court hearing in September, Judge Simon Mitchell questioned why NatWest was spending so much defending a PPI claim. He said: ‘This is a £2,000 claim which the Royal Bank of Scotland are running at a cost vastly more than £2,000. I ask myself why is that?’
Natwest has been slammed for wasting taxpayers’ money on hot-shot lawyers
Mitchell said that as a taxpayer, he owns part of the bank, adding: ‘Did they ask me about their commercial decision to be running this case?’
The case has been adjourned.
Martin Richardson, director of legal services at Moneyplus Legal, warned this was a sign that banks are, ‘clearly worried by this new flood of PPI claims. In many cases these are the same banks that were bailed out with billions of pounds of taxpayers’ money.
‘Those taxpayers would likely be very unhappy if they thought that their money was now being spent trying to defeat the claims of bank customers who were the victims of these secret commissions.’
PPI was sold as far back as the 1970s alongside credit cards and loans, in case people could not repay because of redundancy or illness.
Many people were not aware they had been sold PPI. Banks have paid out £38billion in compensation.
But in many instances, banks were also secretly taking commission from insurers for selling the products, of up to 95 per cent of the insurance cost.
The new cases being brought to court deal another blow to banks, which wanted the scandal to come to an end with the claims deadline last August.
The fresh claims get around the deadline because they relate to the commission charged, opening the floodgates to a wave of claims.
The issue of commission came to light in 2014 after a landmark court ruling found that Paragon Personal Finance received 71.8 per cent commission for selling Susan Plevin a PPI policy, which she did not know about, making the sale ‘unfair’.
The Financial Conduct Authority ruled that anyone with PPI who paid a large commission could be due a refund.
Richardson said: ‘These claims are open to anyone who didn’t make a claim the first time around, had a claim refused or wasn’t refunded in full.’
NatWest said it could not comment on cases that are still ongoing.