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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> Plevin v Paragon Personal Finance Ltd [2014] UKSC 61 (12 November 2014) URL: http://www.bailii.org/uk/cases/UKSC/2014/61.html Cite as: [2014] Bus LR 1257, [2014] 1 WLR 4222, [2014] WLR 4222, [2014] WLR(D) 487, [2014] UKSC 61, [2014] BUS LR 1257 |
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Michaelmas Term
[2014] UKSC 61
On appeal from: 2013 EWCA Civ 1658
Appellant Jonathan Crow QC Ian Wilson Sandy Phipps (Instructed by Irwin Mitchell LLP) |
Respondent Hodge Malek QC James Strachan QC John Campbell (Instructed by Miller Gardner Solicitors) |
LORD SUMPTION: (with whom Lady Hale, Lord Clarke, Lord Carnwath and Lord Hodge agree)
Introduction
Sections 140A to 140C: General considerations
"140A Unfair relationships between creditors and debtors
(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following-
(a) any of the terms of the agreement or of any related agreement;
(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
(c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).
(2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor).
(3) For the purposes of this section the court shall (except to the extent that it is not appropriate to do so) treat anything done (or not done) by, or on behalf of, or in relation to, an associate or a former associate of the creditor as if done (or not done) by, or on behalf of, or in relation to, the creditor."
The proceedings
The regulatory framework
"Where there is a chain of insurance intermediaries between the insurer and the customer, ICOB applies only to the insurance intermediary in contact with the customer."
The question who is "in contact with the customer" may admit of more than one answer, depending on what the relevant ICOB obligation is and who performed the corresponding function. For most purposes, the intermediary in contact with Mrs Plevin in this case was LLP. The only direct contact that she had with Paragon before the contract was concluded consisted in the "speak with".
Non-disclosure of the commission arrangements
"…the touchstone must in my view be the standard imposed by the regulatory authorities pursuant to their statutory duties, not resort to a visceral instinct that the relevant conduct is beyond the Pale, In that regard it is clear that the ICOB regime, after due consultation and consideration, does not require the disclosure of the receipt of commission. It would be an anomalous result if a lender was obliged to disclose receipt of a commission in order to escape a finding of unfairness under section 140A of the Act but yet not obliged to disclose it pursuant to the statutorily imposed regulatory framework under which it operates."
The result of this decision was that in the present case both the Recorder and the Court of Appeal were bound to dismiss Mrs Plevin's claim so far as it was based on non-disclosure of the commission. The Court of Appeal expressed dismay at this outcome. In my opinion, the dismay was justified. I think that Harrison was wrongly decided.
Failure to assess the suitability of PPI for Mrs Plevin's needs
"Requirements for suitability
(1) An insurance intermediary must take reasonable steps to ensure that, if in the course of insurance mediation activities it makes any personal recommendation to a customer to buy or sell a non-investment insurance contract, the personal recommendation is suitable for the customer's demands and needs at the time the personal recommendation is made.
(2) The personal recommendation in (1) must be based on the scope of the service disclosed in accordance with ICOB 4.2.8 R(6).
(3) An insurance intermediary may make a personal recommendation of a non-investment insurance contract that does not meet all of the customer's demands and needs, provided that:
there is no non-investment insurance contract within the insurance intermediary's scope, as determined by ICOB 4.2.8 R(6), that meets all of the customer's demands and needs; and
the insurance intermediary identifies to the customer, at the point at which the personal recommendation is made, the demands and needs that are not met by the contract that it personally recommends."
"Information about the customer's demands and needs
In assessing the customer's demands and needs, the insurance intermediary must:
(1) seek such information about the customer's circumstances and objectives as might reasonably be expected to be relevant in enabling the insurance intermediary to identify the customer's requirements. This must include any facts that would affect the type of insurance recommended, such as any relevant existing insurance;
(2) have regard to any relevant details about the customer that are readily available and accessible to the insurance intermediary, for example, in respect of other contracts of insurance on which the insurance intermediary has provided advice or information; and
(3) explain to the customer his duty to disclose all circumstances material to the insurance and the consequences of any failure to make such a disclosure, both before the non-investment insurance contract commences and throughout the duration of the contract; and take account of the information that the customer discloses".
"48. For Mrs Plevin, Mr. Strachan submitted that the phrase 'on behalf of' was designed to bring within the purview of the court's consideration any relevant act or omission by a person who, in a non-technical sense, would be viewed by the man on the Clapham omnibus as having played some part in the bringing about of the credit agreement for the creditor. Thus it typically applied to any intermediary paid a commission for introducing the customer to the creditor, or (which may be the same thing) procuring the business represented by the credit agreement (and any related agreement) for the creditor. Thus it applied to the acts and omissions of any intermediary, whether acting as agent for the creditor or as a mere broker without an agency relationship with either party to the credit agreement, at least where the broker received commission from (or via) the creditor.
49. Put shortly, the difference between the rival submissions is that Mr Elliott submitted that 'on behalf of' is designed only to capture conduct (including omissions) for which the creditor can be said to bear or share some responsibility, whereas Mr Strachan submits that it captures all conduct beneficial to the creditor, in the sense that it played some material part in the bringing about of the transaction giving rise to the allegedly unfair relationship. Proof that the person whose conduct is prayed in aid received a commission from, or via, the creditor brings on board the whole of that person's conduct, within section 140A(1)(c) …"
The voluntary codes
"Members and their Intermediaries will not use sales techniques relating to optional insurance products such as payment protection policies which might encourage consumers to take out such cover in inappropriate circumstances. In complying with this requirement, Members and their Intermediaries shall have regard to the consumer's circumstances and have particular regard to restrictions or exclusions contained within the relevant insurance policy."
"Any related agreement"
Conclusion