PPI Plevin
Susan Plevin was sold a payment protection (‘PPI’) policy in 2006 to cover her secured loan from Paragon Personal Finance Ltd.
She was not informed that 71.8% of the PPI premium payment was commission paid to Paragon by the insurance company providing the cover. After discovering this, Mrs Plevin took her claim to Court alleging that her relationship with Paragon was ‘unfair’ due to the non-disclosure of the commission, pursuant to 140A (1) of the Consumer Credit Act 1974. The legal argument was not that the policy had been mis-sold, but that the high commission rendered the contractual relationship unfair.
The Supreme Court unanimously ruled that the non-disclosure of commission of 71.8% of the total PPI cost was ‘unfair’ under the Consumer Credit Act 1974 because it led to a sufficiently ‘extreme inequality of knowledge and understanding’. If she had known about the commission, she probably would not have bought the policy. The Court ordered the full repayment of her PPI plus interest.
This decision set a strong precedent that, even if a PPI policy was not ‘mis-sold’, consumers could make a claim for the full refund of their PPI plus interest where high levels of commission (later defined by the FCA as over 50%) were not disclosed to the consumer.
