Mis-sold PPI policy deems credit agreement unenforceable


The ruling issued by Judge Jacqueline Smart at South Shields County Court in the case of Lynne Thorius against MBNA Credit Card Company is an interesting development in the sphere of consumer credit claims.

The case concerned a credit card branded with the logo of Sunderland football club. Ms Thorius did not request payment protection insurance (PPI) when she obtained the facility from MBNA Credit Card Services. Yet she was successively charged for payment protection insurance despite not ticking the box requiring payment protection insurance. The behaviour of MBNA Credit Card Company has been further criticised by FSA Managing Director of retail markets Jon Pain who said "Consumers should not be pressured or deceived into buying PPI and they are entitled to have a policy properly explained to them."

In addition, the Judge in the case agreed with Ms Thorius that a "secret" commission had been paid to the Introducer/Broker by MBNA Credit Card Services. This is in direct contravention of the fiduciary duty owed to Ms Thorius in this case. This aspect of the case enabled Ms Thorius to successfully argue that the credit agreement was unfair and consequently the agreement was unenforceable. Ms Thorius is consequently not liable for the full outstanding balance of over £8000.00 and MBNA Credit Card Services are unable to recover this money from Ms Thorius.

This case vindicates consumers with ongoing payment protection insurance claims and confirms the presence of a means to challenge the validity of consumer credit agreements. Where mis-selling of payment protection insurance has taken place the Judge in this case has shown their desire to protect consumers against unscrupulous financial institutions.

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