Determining the Refund of a Payment Protection Insurance when Consumers Pay off the Loan Early
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This study aims to identify a “criteriaµ able to determine the refund of a payment protection insurance (PPI) premiums in the event of an early repayment of a loan. While the current criterion employed both by regular courts and in arbitration, i.e “pro rata temporis criteriaµ, is respectful of the principle of fairness, it is not fully compliant with the relevant legislation on the rights of consumers of financial services. In fact, the article 22, paragraph 15-quater of the D.L. 18/10/2012 n. 179, which almost entirely repeats the content of art. 49 of the IVASS Regulation 35/2010, states that the repayment of the premium must be made also considering the residual debt; since "pro rata temporis" principle doesn’t consider the residual debt of the loan, it leads to an overestimation of the refund that a consumer receive if he pays off the loan early. On the basis of these premises, the article proposes some alternative criteria able to mitigate the shortcoming of "pro rata temporis" principle.