B e f o r e :
| 1. MARK FROST
2. DONNA FROST
|BLACK HORSE LIMITED
Iain MacDonald (instructed by DWF LLP, 1 Scott Place, 2 Hardman Street, Manchester M3 3AA) for the Defendant
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Crown Copyright ©
loan agreement dated 13th May 2005 entered into between the Claimants and the Defendant ('the agreement'). Under the agreement the Claimants borrowed the cash sum of £15,000 and purchased PPI with a premium of £4,933.50. The loan has not been repaid in full and the Claimants have not made a claim under the PPI Policy. The Claimants make allegations that the PPI was mis-sold to them.
Breach of ICOB 2.2.2R – communications not fair clear and non –misleading
"Advise customer of the applicable features, benefits and exclusions for each of above and attempt to overcome any objections" (emphasis added by the Claimants)
"spoke to my wife and said that it would be beneficially [sic] to take out the PPI policy in case something happened to me, at which point she turned around and looked at my children".
He goes on to assert that:
"both myself and my wife felt coerced into taking out the policy as we felt that the Defendant's representative pressured us by making us feel guilty about not having any security for our children" (para 9).
Mrs Frost's statement repeats these assertions verbatim.
Ground 2: Unsuitability of policy in respect of cost and Limitations
"There is not another insurance contract within our scope that meets all of the customer's demands and needs"
But the manual completely omit the second part of the proviso in ICOB 4.3.1R (3) which reads:
"and the insurance intermediary identifies to the customer, at the point at which the personal recommendation is made, the demands and needs which are not met by the contract that it personally recommends"
6 and 7 of the defence that the rebate is explained in the policy. The Claimants retort that they will have bought the policy by then so it is too late and contrary to the ICOB requirement that information be given in good time before the conclusion of the contract (ICOB 5.3.1R).
Ground 3: The allegation of unfair relationship
54. The remaining allegations should, in the Defendant's submission, fail for the same reasons as are set out above. There is clear authority that the cost of the policy, even if objectively expensive, does not give rise to an unfair relationship. The Defendant drew my attention particularly to the case of Harrison at first instance where HHJ Waksman QC addressing this specific issue, (having made a finding of fact, on evidence, that the PPI was expensive in that case) stated at paragraph 60 as follows:
"It is true that the PPI here was objectively expensive, i.e. by reference to other available products. I can well see how that may form part of a cumulative picture leading to unfairness where the customers have through the fault of the Bank (or a third party nonetheless attributed to the Bank as in Yates) had no real opportunity to apply their mind to questions of cost, for example, because they understood that they had no choice. But it is different where (as here) the Bank induced no such belief. The Harrisons must in truth have realised that the PPI was optional or if not, this was a mistaken impression of their own making. They should therefore be treated as having had a real opportunity to consider whether or not to take the PPI. In that context they could consider its cost, relative, for example, to the cost of the main loan. Here the figures were placed side by side. Moreover, although not determinative, the fact that there was no breach of rule 4.3 in relation to costs (for the reasons given above) counts against unfairness."
Reasons he gives. I reject the Claimants' contention that cost made it an unfair relationship.
HHJ Simon Oliver
4th April 2012
Permission to Appeal
11th April 2012.
John Pugh, Counsel for the Claimants:
"That the learned Judge's judgment erred on the issue of compliance with ICOB 4.3.1R and unfairness in that:
(i). The learned trial Judge failed to distinguish between the decision in Harrison v Black Horse where cost was specifically held not to be relevant to demands and needs of the borrowers and a case such as this one where cost was admitted to be relevant to the demands and needs of the borrowers.
(ii) The learned trial Judge failed to distinguish between an obligation to make a market comparison (which is no part of the Claimant's case) and an obligation to ensure that if the policy being recommended was not of an incorrect type (i.e. in this case one which by reason of advance payment and interest payments increases its monthly cost whereas the demands and needs were for reduced monthly cost).
17th April 2012.
His Honour Judge Simon Oliver
His Honour Judge Simon Oliver
DFJ Reading County Court