Lenders had hoped that the Court of Appeal ruling in Harrison v Black Horse had shut the door on PPI/unfair relationship claims. Particularly welcome was the ruling that compliance with an industry specific rule governing the sale of insurance (the “ICOB” rules) should effectively block any allegation of unfair relationship brought under the Consumer Credit Act 1974. However The Court of Appeal’s decision at the end of last year in the conjoined appeals of Conlon v Black Horse and Plevin v Paragon Personal Finance means this issue will remain in the legal limelight. Both cases involved the sale of a single premium PPI policy with the policy for Mrs Plevin being arranged by a broker.
Mrs Conlon’s appeal was dismissed but mainly on the basis the Court felt it could not question the ruling in Harrison v Black Horse. That it would have decided “Harrison" differently is perhaps demonstrated by the following statement by Briggs LJ “I do not mean thereby to express any sense of comfort about the principle laid down in the Harrison case”.
However Mrs Plevin’s appeal succeeded. It was decided that the credit broker who was not legally Paragon’s agent could be deemed, under the statutory definition of unfair relationship to have acted “on behalf of” Paragon when it came to selling PPI. Accordingly, for the purposes of the broadly defined unfair relationship provisions, Paragon could be liable for any breaches of the specific ICOB Rules by the broker. Financially that is of significance because the broker was insolvent. Legally the ruling by the Court of Appeal is significant because of the emphasis given to the wide scope of the provisions. The fact the legislation placed the burden of proof on a creditor to prove the relationship was fair reflected “a powerful indication of a general Parliamentary intention to confer a broad rather than narrow measure of protection upon debtors”.
Permission to appeal to the Supreme Court was given in both cases.
For further information please contact Jeremy Bouchier – Senior Solicitor