PPI Plevin LCAs

PPI Claim Genre Explained

Payment Protection Insurance was sold on many products and loans in the UK through brokers who have not disclosed their commissions. In many cases, the Undisclosed Commissions (UDCs) were disproportionate. In some cases, the insurance was not fit for purpose. A PPI claim relates to the non-disclosure of significant commission on a Payment Protection Insurance policy, which can lead to an "unfair relationship" under Section 140A of the Consumer Credit Act 1974. The basis for such claims is primarily the Supreme Court's 2014 judgment in Plevin v Paragon Personal Finance Ltd, which established that undisclosed commission could make the loan relationship unfair. Claims also rely on Section 32(1)(b) of the Limitation Act 1980, which allows claims to proceed if the relevant fact (the commission) was deliberately concealed, and the claimant discovered it later with reasonable diligence

The Litigation Claim Asset Lifecycle

A Litigation Claim is established when a claimant contracts with a Legal Representative to recover undisclosed commissions. In many cases, this only occurs when a claimant realises they have been the victim of business practices that do not meet regulatory transparency.

The Legal Representative will collate all of the required evidence for the claim, the contracts, the Letters of Authority, banking information and communications and then assess the claim to ensure that it meets the strict litigation criteria. Any claims that do not meet the criteria are rejected. An independent expert rating then further assesses and rates the claims to ensure that they can be successful in court and meet the insurable standards. At this point an LCA is issued to finance the claim.

There are estimates that there are close to £37 billion of PPI claims already settled with a further £50 or £60 billion more to be processed. Any established and evidenced claim now settles within

6 - 18 months or so historically as the case law is so well established.

The LCA is attached to the claim, not the Legal Representative. Only one funder is attributed to each LCA. The assignment rights for the Claim remain with the LCA funder until paid in full and closed at settlement including principle, interest and fees. The LCA has an agreed interest rate paid against the funded amount through the bidding process. 100% capital cover and coupon is placed immediately.

Legal Representative and Claims Management.

The PPI Claims are processed by various legal Representaives on the Approved Panel List. Each firm is checked to make it has operational and legaal abilities to process high volumes of cases. The cost of processing these claims has been the barrier to processing for the remaining PPI claims. AI now offers this controlled-cost solution to reach the remaining billions in claims. In most cases, PPI Claims settle before court as there is little defense to undisclosed commissions, and where the alternative is an expensive court process through the fixed-fee regime set by the courts which will increase the costs to the defendants significantly. Upon funding, the LCA Claim will proceed through the Claims Process which is directed down the Court established Fixed Fee Regime in the Fast-

Track. This is important as it establishes the legal fees specific to the claims. This increases the commercial pressure on the defendants towards settlement before court proceedings, especially when there exists case law, Supreme Court Judgement and clear evidence of undisclosed commissions leaving no room for a defence. There is now a firm litigation and negotiation schedule in place to expediate the litigation.

Reporting

Each LCA has its own data which is supplied to each funder through their own dashboard covering all of their funded cases. The status and progress of each claim is therefore transparent in real time.

PPI Claim Investment Summary

LCA-£300 max

Interest Rate-Open to Bids

Damages Value-Average £2000

Legal Fee-Fixed Costs

Insured Cover-100% with 12% coupon if fails

Ratio Success >80%

Payout-6 to 18 months

3. LCA Asset Summary

Transaction Type: Issuer packages Litigation

Contracts with principal insured and revenue confirmed from Court Fixed Fee regimes, boasting a 80% likelihood of successful settlement or litigation.

Key Parties:

Issuer: Various Approved Legal Representatives

Seller & Servicer: as above

Arranger: LITDAQ Exchange and Rivermead

Auditor

Joint Lead Managers: Legal Representative

Security: A-Rated Insurer.

Claim Success Ration: >80%

Cover Ratio: (Claim Asset Value to Funding

Committed) 5.5:1

Class A: GBP bundles , Fixed APR (Variable and Negotiable),

Rated A by Insurance, Green by Litigation (>80% success forecast), Matures 36 months max, average 6 to 18 months. Class A pays interest upon settlement of the claim.

Security: Investors benefit from security cover:

 Capital Cover Insurance with coupon.

Key Risks:

Issuer Default: None, 100% insured. Investor principal is insured, relying on court-directed fixed fees per claim.

Subordination: None - all are primary fee-collecting claims.

Market Risk: None - value established by investment for claim disbursements costs only, 100% covered by insurance.

Borrower Set-off: None

Conflicts of Interest: None

STS Compliance: Transaction should meet EU "Simple, Transparent, Standardised" (STS) standards.

Risk Retention: None to principal. Claim success risk at court is mitigated by Supreme Court Decisions, established case law, and a track record of successful claims through the courts.

Claim Success Ratio

This ratio is determined through the independent claim report and is important as it is the indicator as

to whether the claim will succeed or not and therefore receive the legal fees expected.

Cover Ratio

This ratio reflects the claim value (the legal fees due from successful claims) and the amount of financing committed to the claim.

4 The Next Steps.

We are currently issuing LCAs for PPI Claims. We invite instituitional investors to submit a bid for the

purchase of Class A PPI LCA bundles. Your bid should specify your desired interest rate, which will be

submitted for acceptance to the issuer.