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With the deadline for payment protection insurance (PPI) compensation claims rapidly approaching, executors and estate administrators have been warned they could face hefty costs if they fail to investigate whether funds are owed to their clients.
PPI was introduced in the 1990s and the mis-selling scandal that surrounds it has led to banks setting aside around £50 billion to cover the costs of settling claims.
Estimates suggest that around 60% of this sum has now been paid out, with a substantial proportion of the remainder potentially owed to deceased estates.
In April, the Society of Trust and Estate Practitioners (STEP) issued guidance to those working with estates whose PPI arrangements are unclear.
In its statement, STEP warned that following the 29 August deadline, claims management companies might pursue outstanding claims against the personal representatives involved, on the basis that they should have checked whether estates were entitled to compensation, but failed to do so.
In addition, the organisation pointed out that the Official Receiver had announced in February that it is reviewing and considering PPI claims in closed bankruptcy cases dating back to 1 January 2000; potentially resulting in additional payments for creditors.
Commenting on these developments, Neil Fraser, partner at Fraser and Fraser, said: “A valid PPI claim will form part of the assets of an estate and personal representatives need to be rigorous in checking if such a claim exists.
“Those who are currently administering an estate (or who have administered one in the past) need to bear in mind that, if they don’t carry out checks prior to the 29 August deadline, they could potentially face claims from beneficiaries.”
And time is fast running out, he warned: “Given the realistic timings involved, any PPI checks will have to start two months prior to the 29 August deadline. After that, banks and financial institutions won’t be liable for PPI claims; which could have major consequences for personal representatives.
“In light of the above, Fraser and Fraser has rigorous processes in place to check whether PPI compensation is owed regarding the estates with which we are working.”