Law firm slams Central Bank's 'reckless' advice on PPI claims

A Dublin-based law firm that is acting for more than 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.

Mr Bernard Sheridan, the Central Bank’s director of consumer protection, said: "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."

Michael Muldoon, partner at law firm McHale Muldoon, and who is leading these cases, said the advice is reckless, because of what is known in the industry as the "six year rule".

The rule means that, in the event that complaints are not upheld by the financial institution, the next step would be to present a complaint to the Financial Services Ombudsman (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’s data suggests that this applies 90-95% of complaints are not upheld by the financial institutions.

The law firm said: "If a consumer who was sold PPI in say October or November 2006 heeds the advice of the Central Bank 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."

In a case against MBNA, McHale Muldoon has been instructed by more than 400 clients who have been sold PPI by MBNA with credit cards and loans.

The law firm has submitted claims to the lender on behalf of over 160 clients that have been sold PPI by the lender.

McHale Muldoon claims that 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. The lender has tried, via a well-known Dublin law firm, to use a technicality in the way the claims are presented to avoid providing a response.

The firm has reported this to Central Bank and has invited it to impose sanctions.

Advice has also been given to consumers to avoid using third party firms to submit their claims.

Mr Sheridan has said: "The charges can be significant, so what they might do, instead of charging an up-front fee they may say that if you get a refund they will take a cut out of that.

"That could range from 10% to 25% of the refund, so it could be significant and really there is no need for any customer to bear that cost at this stage."

McHale Muldoon said that the Central Bank is "detached from the reality of what is happening with these claims". They claim that vast majority of claims are not being upheld.

McHale Muldoon said: "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. 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."

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