November 2014, the highest court in the UK, the Supreme Court, provided judgment on a case; Plevin-v-Paragon Personal Finance Ltd [2014] UKSC 61. Mrs Plevin who opened the case, was sold PPI for a loan that she had taken out with Paragon. However, Mrs Plevin was not told that Paragon would be receiving 71.8% of the premium as commission. The Supreme Court questioned whether a relationship could be deemed unfair where the Insurance conduct of business sourcebook (ICOB) rules had not been breached. They decided that while the rules gave some evidence of what the standard was, they do not determine the relationship as unfair. However, failure to disclose a commission as high as 71.8% was sufficient to make the relationship unfair. If Mrs Plevin had known the size of the commission she may have questioned whether the PPI represented value for money. You can find a copy of the Judgement here, and a video is also available here.
Unfair Relationship Claims
Plevin-v-Paragon
Unfair Relationship claims stem from the Plevin-v-Paragon case and the changes made in 2006 to the Consumer Credit Act 1974. The CCA (1974) was amended to better protect customers who enter a credit agreement. Amongst many of the changes made was the ‘Unfair Relationship’ provisions which gives the court power to grant relief to customers who have been affected by the following factors set out in section 140A(1):
The creditor has exercised or enforced any of their rights under the agreement or any related agreement.
Anything done by the creditor or on behalf of the creditor without the debtor’s [customer’s] consent. Some of the terms of the agreement / related agreement were deemed unfair.
Some of the terms of the agreement / related agreement were deemed unfair.
Where the court finds that the relationship is unfair, it has very wide powers to grant relief under section 140B. These powers include:
Require the creditor to repay part or all the sums paid under the agreement back to the borrower [customer].
Reducing or discharging any sum payable by the borrower.
Setting aside any duty imposed on the borrower, i.e. writing the loan off.
Altering the terms of the agreement.
Queensbeck specialises in recovering PPI premiums where a high level of commission was secretly retained by the lender. Customers who have taken out a secured loan in the last 20 years are unlikely to have made a successful PPI claim. Fill in the form on the right to see if Queensbeck can help.
What does this judgement mean to me?
If your Payment Protection Insurance claim was previously marked unsuccessful, this could have been due to the following reasons;
Loans that were taken out before 2005 were not under the FSCS or FOS’ jurisdiction which means that standard CMCs were unable to run the claim using the PPI redress scheme put in place by the FCA.
A mis-selling claim was not possible as the company that sold the policy was no longer trading.
The secured loan industry made huge commission on the sale of a PPI Policy; typically a credit broker sold PPI Premium for around £5,000.