Royal Bank of Scotland lost an appeal over unfair commissions by payment protection insurance

Royal Bank of Scotland (RBS) lost an appeal over unfair commissions that were charged to customers who were sold payment protection insurance (PPI), potentially increasing lenders’ exposure to litigation over the long-running scandal, Reuters says.

The United Kingdom’s Supreme Court unanimously allowed an appeal brought by two former customers of RBS, part of British bank NatWest

The decision means an earlier ruling that RBS must repay all the money paid to one of them for PPI, less any redress the bank has already paid, was upheld. The case of the second former customer continues.

Mis-selling of loan insurance, or PPI, was one of Britain’s costliest retail financial scandals, with banks paying out around 40 billion pounds in compensation.

Judge George Leggatt

Even to this day RBS has not revealed the exact size of its commission but it is now known that its commission was well over 50% of the payments made

Judge George Leggatt

The ruling could widen the number of PPI mis-selling claims faced by lenders, a concern expressed by RBS’s lawyers at the Supreme Court appeal in January.

The former RBS customers each had a credit card with the bank and were sold PPI, but were not told that most of the money paid by them for PPI went to RBS as commission.

The bank argued that the two lawsuits, which were both filed in 2019, should be thrown out as they should have been brought within the usual six-year limitation period for bringing a civil claim, from the date the last PPI payment was made.

PPI policies started to be sold in the 1970s, with the bulk sold between 1990 and 2010. Claims were subject to a Financial Conduct Authority deadline of August 2019, but can still be made in court.

But the Supreme Court ruled the relationship between RBS and its former customers continued to be unfair until their credit card agreement ended, meaning the claims were brought in time.

Reporting by Sam Tobin in London; additional reporting by Iain Withers; Editing by Rod Nickel