PPI claims pursued via the courts could be at an end

Dated:   

A landmark Court case has set a precedent in PPI litigation to the detriment of thousands of borrowers who are still trying to claim for the mis-selling of their policies.

Mis Sold PPI Money

Paragon Personal Finance Limited and broker LL Processing (UK) Limited have been victorious in following the same stance of the Supreme Court’s robust decision in Harrison v BlackHorse in 2011. In this case, the borrowers decided to end their battle with BlackHorse relating to their PPI claim, which they argued created an unfair relationship under Section 140 of the Consumer Credit Act.

In October 2011 the Court of Appeal dismissed the borrowers’ appeal from the High Court. The arguments were rejected on the grounds that there had been no breach of the Insurance Conduct of Business Rules (ICOB). It was found that BlackHorse was not obliged to advise on the cost of the policy and they were not obliged to advise on and compare the insurance cover with alternative cheaper cover on the market. Further to this, BlackHorse were not required to advise the borrowers as to the suitability of the cost of the policy, as the borrower had never made BlackHorse aware that it was a concern.

Since the upheaval caused following Harrison v BlackHorse, on 4th October 2012, Recorder Yip QC set to follow in the footsteps of BlackHorse by ruling against a claim on the grounds of an unfair relationship.

The Claimant, Mrs Plevin took out a loan for the sum of £34,000 in 2006 to fund some home improvements and consolidate an existing debt. With this loan she was sold a policy for the sum of £5,780 through the Broker, LL Processing (UK) Limited. Following on, Mrs Plevin commenced legal proceedings against the broker and lender on the grounds that she was mis-sold the policy.

It was stated by Recorder Yip QC that “ …Whilst Mrs Plevin suffered buyer’s remorse in relation to her decision to take out PPI following the Harrison decision, a seller is not obliged to warn a buyer of whether his product is expensive or why he charges the prices he does. The Court found that there could be no unfair relationship between Mrs Plevin and Paragon and also decided against Mrs Plevin’s claim under Section 18 of the Consumer Credit Act that the PPI agreement was incorrectly executed and therefore unenforceable.”

An offer of settlement was made by Paragon which was rejected by Mrs Plevin’s solicitors. Instead, they raked up costs mounting to £320,000 against a claim value of approximately £5,000. Mrs Plevin was required to pay the costs of Paragon on an indemnity basis in relation to the whole action brought. The representative for Paragon said: “This was the strongest Order that the Court could make and is illustrative of the displeasure with which the Claimant’s solicitors conduct was regarded. It was clear from the amount in question that the litigation had been run only to benefit Mrs Plevin’s solicitors and not to achieve the best result for her.”

Given the result of this case and that of BlackHorse, it appears that there is little prospect of successfully continuing with claims relating to PPI through the Court process. The Court is also very much aware of solicitors who are no longer acting in the best interest of borrowers and this is now guaranteed to be checked in light of all claims brought before the Court.

Whilst this does hugely limit the number of claims that will be pursued through the Courts in the near future, it is recommended that borrowers aim to settle their claims through the Ombudsman if unsuccessful against their brokers. This can add to the delay and frustration caused by the length of time required to push PPI claims forward, with timescales varying between 12-24 months. Nevertheless, the cost effective method has proven to be more successful than not.


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