Key Facts
- •Two appeals concerning mis-selling of Payment Protection Insurance (PPI) and subsequent claims under sections 140A and 140B of the Consumer Credit Act 1974 (CCA).
- •Both claimants received settlements from the defendants (Santander and Skipton) based on FCA guidance following complaints about undisclosed commission.
- •Claimants subsequently brought further claims, arguing the initial settlements did not preclude claims for unfair relationships under the CCA.
- •Both lower courts dismissed the claimants' further claims, finding that valid compromises had been reached.
- •The appeals focus on the interpretation of the settlements, the existence of consideration, and the court's residual power to assess unfairness under the CCA despite settlements.
Legal Principles
Sections 140A-C of the CCA allow courts to make orders if the creditor-debtor relationship is unfair due to terms, creditor actions, or other factors.
Consumer Credit Act 1974
The court's assessment of unfairness under the CCA is a two-stage process: determining unfairness and then deciding on an order. The assessment considers the entire relationship's history.
Smith v Royal Bank of Scotland plc [2023] UKSC 34
Non-disclosure of substantial commissions can render a creditor-debtor relationship unfair, particularly if it prevents informed decision-making.
Plevin v Paragon Personal Finance Ltd [2014] UKSC 61
A creditor is responsible for omissions creating unfairness if reasonable steps to prevent or mitigate it were not taken.
Plevin v Paragon Personal Finance Ltd [2014] UKSC 61
FCA rules and guidance (DISP) do not create independent causes of action. They guide fair complaint handling; offers of redress must be voluntarily accepted to create legally binding settlements.
FCA Handbook, DISP
Part payment of a debt is not sufficient consideration to discharge the debt unless there is some additional benefit to the creditor; however, this rule doesn't apply to unliquidated claims.
Common Law; Foakes v Beer; Chitty on Contracts
Courts retain jurisdiction to assess fairness under CCA even after settlements, but compromises made in good faith are relevant and should not be lightly overturned.
Holyoake v Candy [2017] EWHC 3397
Outcomes
Appeals dismissed in both cases.
The courts found valid compromises had been reached. The FCA's guidance (DISP) was used as a framework for fair settlements, not a mandatory payment scheme. The claimants received consideration for the settlements, and the court's power to review for unfairness did not outweigh the importance of upholding good-faith compromises.