PPI and The Latest FCA Compensation Scheme

September 23, 2017

It was hoped that the banking industries’ long running PPI headache would come to an end in August 2019, with the announcement by the FCA of a deadline for bringing PPI claims. The FCA has now embarked upon a significant advertising campaign to try and attract those customers who have never previously complained, whilst also forcing lenders and insurers to write directly to a large number of customers who have had their PPI complaints rejected in past.

However, the guidance provided by the FCA in its latest guidance and amendments to compensation rules raises a significant risk that customers may well find themselves short changed.

The announcement by the FCA, it’s various consultation documents[1] and its final policy statement “PS17/3” essentially set outs the FCA’s plan to allow for a two year run-off period and also attempts to provide guidance upon how to deal with the effect of the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited [2014] UKSC 61.

The decision in Plevin has opened up the requirement to consider the extent of commission payments either paid to intermediate brokers and/or retained by lenders/insurers.

Often these commission levels were extraordinary, and in the vast majority of cases well above 50% of the PPI premium. Furthermore, most premiums were “single policy”, with banks providing loans for the premium sum and then charging interest throughout the life of the PPI debt. The profit earned by the intermediaries, by insurers and banks was simply massive. It was against that background that the Supreme Court ruled that failure to inform Mrs Plevin that commission in her case amounted to just over 70% of the premium policy cost gave rise to an unfair relationship pursuant to the Consumer Credit Act 1974.

The FCA has now introduced a “two stage” test, which makes a great deal of sense. The two stages are firstly, whether the product was mis-sold, applying the existing ICOBS and DISP rules (in effect, how PPI mis-selling has been assessed since 2010); furthermore, the second stage is to assess against “Plevin” and the unfair relationship provisions under the Consumer Credit Act 1974, s.140A-140D. It is this “second stage” which is the main focus of this article.

The latest FCA’s “guidance” in relation to the second stage has introduced an arbitrary threshold against which an unfair relationship is tested, namely being a rebuttable presumption of unfairness if the commission (and “profit share”) is above 50% cost of the PPI premium. Secondly, the FCA’s guidance suggests that only that element of the commission (and “profit share”) in excess of 50% ought to be redressed to the customer.

This rather arbitrary approach stands in stark contrast to the approach of the English courts, and there would therefore appear to be a significant divergence between the regulator and the courts, in particular as to how redress is to be calculated.

This divergence is all the more surprising as the regulator has historically been reluctant to trespass upon an area which has always been seen to be the province of the courts.

In guidance provided in May 2008, the OFT confirmed that:

3.10 It is for the court to determine in an individual case whether the particular credit relationship is unfair to the borrower. In doing so the court must have regard to all relevant matters, which may include in particular the circumstances of the individual borrower and the nature of the relationship between the parties.

3.11 A finding in one case may not necessarily be repeated in another, even if the same terms or practices are involved, since the circumstances may be different. For example, in one case the lender may be found to have exploited the borrower’s vulnerability or lack of understanding, or failed to provide relevant information, and so caused detriment to the particular consumer. Different facts may apply in other cases.

3.12 The Act does not define an unfair relationship beyond setting out in general terms the classes of factors which can give rise to such relationships. This provides the courts with maximum flexibility in considering unfairness, and avoids unduly constraining them in individual cases.

3.13 It is therefore not possible, in advance of cases decided by the courts, for the OFT to provide definitive guidance on the meaning of the unfair relationships test or how it is likely to be applied by the court. We will however consider amplifying the current guidance in the light of relevant court judgments as and when these come to our attention.

3.14 It is nevertheless possible to set out some general principles based on the formulation of the statutory test in section 140A. These will not in any way be binding on the court, but in the OFT’s view may underpin the court’s interpretation of the provisions in individual cases…….[2]

In 2014, the role of the OFT was passed to the FCA, and so regulation of consumer credit thereafter became part of the FCA’s wider responsibilities. However, the same limits upon the FCA’s remit have been emphasised in a leading text-book on consumer credit, where (up until recently) the FCA was reluctant to provide detailed guidance:

“[47.144]       When CCA ss140A-140D were introduced, there was a great deal of (entirely justified) criticism of refusal by Parliament both to insert guidelines in the statute and to empower the OFT to do in its place. This is not, however, legislative idleness or laissez-faire but quite deliberate policy stated by the Parliamentary Under-Secretary for Trade and Industry in the course of the committee stage of the bill that became the CCA 2006. The Minister reasonably pointed out:

“It is not possible to define an unfair relationship as being certain things, or combinations of specific types of conduct, without limiting it in some way. That would serve to reduce the effectiveness of the test and the ability of the court to tackle unfair relationships – whatever form they take…the test means that the lenders have to look beyond simply complying with procedural rules, to ensuring the substance of the relationship is not unfair…”

[47.191]        The Government White Paper which preceded the reforms envisaged the right to bring unfair relationships before the courts ….It was also envisaged that there would be increased use of an ‘accessible ADR system’. In any event, CCA 2006 has decided to proceed one step at a time. CCA 1974, s 140B contemplates unfair relationships being raised in the first instance by the parties themselves and then solely through the courts.”[3]

To be fair, the FCA has indicated in its PPI policy statement, FCA 17/3 that:

“By proposing rules and guidance on PPI complaints in light of Plevin we do not in any way seek to usurp the prerogative or discretion of the courts under s.140A-B”[4]

However, there is a risk that the FCA has done precisely this and in so doing has allowed the lending and insurance industry to redress at a level below potential awards which could be received through the courts.

To consider whether the FCA is now at risk of short-changing customers one has to look at the history of the FCA’s approach and the way in which various courts have also addressed these particular issues.

Background – Pre-Plevin and ICOB

Pre-Plevin, PPI mis-selling cases were mainly redressed for breach of the FCA’s Insurance Conduct of Business Rules (ICOB).

Importantly, ICOB(S) did not include any requirement to disclose commission payments and did not control unfair relationships.

The original PPI redress scheme was introduced in December 2010.

Until the Supreme Court decision in Plevin, the PPI scheme approached the question of mis-selling in line with the Harrison decision i.e. the non-disclosure of commission did not amount to a breach of ICOB(S) or give rise to an unfair relationship.

This meant that the main issues were ICOB(S) based, in particular:

  1. Clear, fair and not misleading communications – eg written or oral, clarity of documentation from customer’s perspective
  2. Suitability – eg financial capability and understanding, need, affordability, employed or self-employed, age etc
  3. Evidence of demands and needs –whether the customer’s demands and needs documented etc

Until Plevin, the level of commission payment or retention was not relevant to redress. This situation changed with the Supreme Court decision in Plevin (a case that conjoined with a case called Conlon, which Muldoon Britton’s Michael Muldoon was the principal solicitor on, but which settled just shortly before the Supreme Court hearing).

It should be noted that the FCA guidance prior to Plevin was that the excessive commissions was not per se a ground for liability.

Part 2 – Unfair relationship – CCA 1974, s.140A – post Plevin

The Consumer Credit Act 1974 (CCA) states:-

 “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.”

Determination of cases under the Consumer Credit Act 1974 is solely the remit of civil court jurisdiction:

“The standard of conduct required of practitioners by the ICOB rules is laid down in advance by the Financial Services Authority (now the Financial Conduct Authority), whereas the standard of fairness in a debtor-creditor relationship is a matter for the court, on which it must make its own assessment.” (As per Lord Sumption in Plevin).

Prior to Plevin, the leading case on the relationship between section 140A and the ICOB(S) rules was the decision of the Court of Appeal in Harrison v Black Horse Ltd [2012] Lloyd’s Rep IR 521. In Harrison the Court of Appeal declined to find a relationship unfair (the commission was 87%, described as “startling” by Tomlinson LJ) because the lender had not breached the ICOB(S) rules, either in charging the commission or failing to disclose it.

In Plevin, the defendant sought to rely on this argument. The defendant failed and Harrison was, in effect, overturned.

The change after the Supreme Court decision in Plevin, was that the level of the commission associated with the sale of a PPI policy could give rise to unfair relationship under section 140A of the Consumer Credit Act 1974 in certain circumstances.

The latest approach of the FCA[5]

The FCA has published guidance as to how lenders ought to assess Plevin cases. That guidance suggests that:

(1) There is a prima facie assumption of an unfair relationship if the commission element plus “profit share” is greater than 50% of the premium cost (ex interest) (the so-called “tipping point”);

(2) The “tipping point” may be moved if other factors are in existence – such as “vulnerability factors” (or other factors which presently remain unclear);

(3) Only the commission (and profit share) percentage that is in excess of 50% (plus interest) is required to be repaid.

It has been identified that there is a significant litigation risk in this approach. This is based upon market intelligence and a recognition within the claimant industry that redress based upon the FCA’s recommended approach is inconsistent with the historic approach of the county courts as to relief. The FCA’s approach ought, therefore, to be contrasted with the applicable case law in this field.

Relevant Case Law 

Plevin v Paragon Personal Finance Limited [2014] UKSC 61 (Supreme Court, 12th November 2014) HERE

Plevin determined that a failure to disclose the level of a commission payment created an unfair relationship where that commission payment was 71.8%, where the premium was paid at the outset through a loan and not through installments.

“Any reasonable person in her position who was told that more than two thirds of the premium was going to intermediaries, would be bound to question whether the insurance represented value for money, and whether it was a sensible transaction to enter into. The fact that she was left in ignorance in my opinion made the relationship unfair” (as per Lord Sumption in Plevin paragraph 18).

What Plevin does not determine:-

  1. What the actual tipping point is in terms of commission levels;
  2. What factors must be taken into account when considering the tipping point on any individual case;
  3. What the correct level of redress is where a relationship is considered unfair (see below);
  4. What other breaches of the CCA are possible and may be considered unfair.

Plevin v Paragon Finance Limited (Relief hearing) (Manchester County Court, 2nd March 2015, HHJ Platts) HERE

Plevin returned to the Manchester County Court to decide what relief should be ordered pursuant to Consumer Credit Act 1974 section 140B, on the Supreme Court’s finding of unfairness under CCA s. 140A. At the County Court, Judge Platts ordered that the full commission payment (plus interest) should be paid to Mrs Plevin and that the costs should be paid by Paragon Personal Finance Ltd.

Conlon v Black Horse Ltd [2013] EWCA Civ 1658 HERE

Conlon was the sister case to Plevin right up to the doors of the Supreme Court.  Mrs Conlon was represented by Michael Muldoon, together with Hodge Malek QC and James Strachan QC. The Court of Appeal Judgments in Plevin and Conlon were delivered in one judgment. Conlon was settled prior to the Supreme Court hearing despite the commission payment being 40%. Plevin was not settled, despite the higher commission payment.  There is one key difference between Plevin and Conlon. In the case of Plevin, Mrs Plevin stated that, had she known the level of Commission payment (71.8%) she would have “certainly questioned this.”

In Conlon, the claimant stated that she would not have bought the premium at all had the commission payment been disclosed to her (see paragraph 6 of the judgment of Briggs LJ in Conlon). The difference is that Mrs Plevin may still have purchased PPI insurance, making the commission the only item in question, whereas Mrs Conlon’s evidence put the whole sale of the policy in question. Had Conlon proceeded to the Supreme Court, it is possible that Mrs Conlon would have succeeded on the same basis as Mrs Plevin and the outcome would mean that if a customer states in litigation that they would not have bought the policy if the commission was disclosed (even if the commission was below 50%), then the lender may still be at risk on the cost of the whole premium.

The Court concluded that a relationship is unfair simply on the basis of the customer’s evidence. It is for the lender to rebut that statement – section 140(B)(9)

It is immediately apparent that the financial consequences for lenders had Conlon proceeded would have potentially been greater than payment in accordance with the present FCA approach.  It also calls into question the FCA’s use of the 50% “tipping point – see below.

Brookman v Welcome Financial Services Limited (Cardiff County Court, 6th November 2015, HHJ Keyser QC) HERE

In this important decision, the county court Judge found that the sale of a policy with a commission element of 45% gave rise to an unfair relationship. The premium elements were divided as follows:

The sum total of premiums paid in respect of the First PPI and the Second PPI, before rebate, was £6,171.69. The evidence as to what was done with those premiums is broadly as follows.

  • 45% was deducted by the defendant and retained as commission.
  • The remaining 55% was remitted to the claims-handling administrator. It retained 2% as its administration fee and paid 5% to HMRC for Insurance Premium Tax. It then paid the remaining 48% to the insurer. The insurer retained 3.75% on its own account. That left 44.25% of the premium to be accounted for.
  • 20% was paid into an Equalisation Fund. Payments on account were made out of this fund to the defendant from time to time as agreed between the defendant and the insurer; in 2007 and 2008 these payments were made at the rate of £500,000 per month. The defendant’s own evidence described these payments as being “an advance payment on its anticipated profit share”.
  • Payments could be withheld if the insurer believed that insufficient funds remained in the Equalisation Fund to meet liabilities in respect of premium refunds upon cancellation of policies. Subject to that, the defendant was entitled to the entirety of the Equalisation Fund.
  • The remaining 24.25% (“the Surplus”) was used to meet customers’ claims under their PPI policies. Any amount remaining after all claims had been met was payable to the defendant as Profit Commission.

By the date of this decision, Plevin had already been decided in the Supreme Court. However, Plevin had not considered the issue of “profit share” as between the lender and insurer (See paragraphs 43.1 to 43.8 of the judgment  in which the Judge concluded that the failure to disclose the commission element and the profit share rendered the relationship unfair).

The Judge rejected the argument that the remedy should only be that part of the commission above 50% (the so-called “tipping point” as suggested by the FCA in its Consultation documents).

The Judge awarded the full premium, minus any rebates and further deducting the equivalent cost of a  “pay as you go” policy (which would have cost £922). This was considerably more than the FCA’s suggestion of only the commission above 50% (See paragraphs 47.8 and 47.9 of the judgment for further details).

It should also be noted that Plevin and Brookman once again reinforce the essential point that once unfairness is raised it is for the Defendant to disprove it – Bevin v Datum Finance Limited [2011] EWHC 3542 (Ch) and section 140A(9) – “Where the debtor alleges the relationship between the creditor and the debtor is unfair to the debtor, it is for the creditor to prove to the contrary

Langley and Langley v Paragon Personal Finance Limited – Coventry County Court, 28th October 2016 (Unreported)

This is another case in which the claimant was represented by Michael Muldoon of Muldoon Britton.  In this case the Court of Appeal (after Plevin) remitted the issue of relief back to the County Court (liability under s.140A Consumer Credit Act 1974 having been admitted to by Paragon). The sole issue was the remedy, with Paragon arguing that the relief should be limited to the excess above 50%.

The premium (ex interest) was £18,200 (£40,136.44 with interest). The commissions totaled £10,982.40 (ex interest). This meant that the commission element was 60% of the value of the premium.

Notably, the claimants stated in evidence that they thought PPI was mandatory, and so Paragon argued that the claimants would have have purchased the premium in any event (i.e. even if told of the excessive commission). The County Court Judge still ordered the repayment of full commission plus interest.

Verrin and Winkett v Welcome Financial Services Limited – Plymouth County Court, 27 May 2016 (Unreported)

In this case, the Claimants paid £4,286.01 for a single PPI premium. The level of commission was 45%, but the Defendant was to receive a further profit share which brought the commission plus profit to circa 85% of the premium (i.e. the Brookman point). The Judge therefore found an unfair relationship and ordered repayment of the whole premium plus contractual interest, having found that the claimants would not have purchased the premium had they known of the profit and commission element (even though neither of the claimants specifically said the same).

McWilliams v Norton Finance (UK) Limited – Court of Appeal [2015] EWCA Civ 186 HERE

In this case, the level of commission amounted to 62.6%. However, the case was run mainly on the basis of breach of fiduciary duty, in that the defendant was the credit broker and was liable to account for secret commissions it had received from the lender (45% of the premium).  The Court of Appeal allowed an appeal by the Claimants and ordered payment of the commission plus interest (paragraph 56).

Townson v FCE Bank Plc (t/a Ford Credit) (Birmingham County Court, 23rd June 2016, HHJ Carmel Wall)

In Townson the County Court judge ordered repayment of the whole PPI premium.

Patel v Patel [2009] EWHC (QB) (10 December 2009) HERE

 Albeit, not a case concerning PPI, this case appears to establish that the relevant date for limitation purposes in relation to the Consumer Credit Act 1974, section 140A is the date the relationship between creditor and debtor ceases to exist. In this case, arguments based upon an “unfair relationship” were not time-barred, even though relevant loans were from the 1990’s, and as the relationship between creditor and debtor subsisted beyond 6th April 2008, the unfair relationship provisions were available.

This case has particular significance, as it confirms that the relevant date of assessment of the “unfair relationship” is not the date of sale, but the date of end of the debt created by the transaction. This is highly relevant to PPI debt.

The relevant date for the existence of the debt would appear to be 6th April 2008, so if the PPI policy created a debt which still exists after that date then the PPI policy (and debt) is capable of being reopened under the Consumer Credit Act 1974, s.140A and 140B.

 Ongoing Litigation

There appear to be six routes by which consumers can seek to litigate claims where no alternative ADR exists, even where the lender has only paid redress for any element of commission above the “tipping point”:

  1. Litigated claims under s.140A Consumer Credit Act 1974 for redress of Profit share (in excess of commission) – Brookman v Welcome Financial Services (6/11/2015); Verrin v Welcome Financial Services (27/5/2016);
  2. Litigated Claims under s.140A Consumer Credit Act 1974, even if the commission element is below 50%, based on existence of rebutting factors e.g. vulnerability, lack of affordability, age etc;
  3. Litigated Claims under s.140A Consumer Credit Act 1974, based upon the “Conlon argument”. (i.e. argument that even if the commission is below 50%, the whole premium should be repaid if the customer states: “I would not have bought the PPI policy had I known of the level of commission”);
  4. Litigated Claims under s.140A CCA 1974 for whole of the commission or whole of the premium, if the banks adopt the policy of only paying the excess of commission above 50% (i.e. above the tipping point) – as in the relief hearing for Plevin;
  5. Pre-action disclosure requests based upon the above, but in particular the Brookmanclaim and internal policy/guidance documents as to disclosure of commission and/or profit share;
  6. Litigated claims on PPI purchased on a series of historic policies if there is a “chain” of refinancing and the relation exists beyond 6th April 2008 – Patel v Patel.

There may indeed be hurdles of limitation, but those hurdles will be alleviated by the approach in Patel, in which it was confirmed that limitation will not begin to run until the agreement has been “completed” under the Act i.e. when the debt no longer exists. As indicated above, the debt will need to have existed beyond the 6th April 2008, notwithstanding the date of the PPI sale. Furthermore, there is a real possibility that claimants will seek to attack debts based upon historic PPI policies and payments, including those attaching to chains of refinance.

Whilst a primary six year limitation period would appear to attach to a demand for recovery of payments, it may well be that s.140B relief involving reduction in debt (as opposed to a payment of money) may be classed as an action upon a specialty, and therefore allow for a 12 year limitation period.

There is also an interesting argument as to whether section 32 of the Limitation Act 1980 might assist claimants. This is the provision which allows for extension periods in the event of, inter alia, deliberate concealment. Under section 32(1)(b) the limitation period may be suspended where:

(b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant;

In such circumstances:

the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.

 The suggestion that deliberate concealment may involve an omission is a difficult one. However, given the decision of the Supreme Court in Plevin, the higher courts may be sympathetic to an argument advanced on this basis. It may also be beneficial for claimants to seek disclosure of lenders policy documents or training manuals as to the general approach to disclosure of PPI commission and/or profit share.

Notably, in Conlon at first instance, Mr Recorder Atherton stated:

  1. The Competition Commission report and the defendant’s disclosures shine a light upon the profitability and commercial importance of that business and the barriers to competition in that market. I consider that it is reasonable to infer that the question as to whether to disclose the facts about commissions would have been considered and decided by the defendant at a high level. In the absence of any evidence from the defendant on this issue I consider that it is also reasonable to infer that it was decided that it was not in their own commercial interests to do so because disclosure might cause potential borrowers to decline the PPI offered and explore other options with consequent delay or disruption to the business.


  1. That is precisely what Mrs Conlon said she would have done if she had known that she would be paying 40 percent of the premium to BH as commission with interest. She said that she did not expect that BH would earn so much commission and she feels she was not told the entire truth. I accept her evidence about that.”

The trial Judge in Conlon therefore formed the view that there was an inference available that the level of commission had been deliberately withheld by Black Horse. This would give rise to a potential argument for limitation to be triggered from the date at which the claimant discovered the concealment of the level of commission and/or the unfair relationship (this would possibly be the date when the Plevin issue first came to the attention of the public).

 Why has the FCA adopted the line that it has?

The approach of the FCA is all the more remarkable given that the majority of cases referred to above are quoted within the FCA consultation documents and the final policy statement PS 17/3. The FCA has indicated the following in PS 17/3 itself[6]:

“We have carefully considered all the feedback on this point, but see no reason to change our views or approach. So we are basing our final approach around a single presumptive tipping point of 50%, which we remain of the view is fair and appropriate and not remote from the approach the courts would take.


  • We continue to consider that 50% is appropriate in the context of our regulatory judgement concerning PPI complaints, based on what the Supreme Court said in Plevin about undisclosed commission of 71.8% being a ‘long way beyond’ the ‘tipping point’ for unfairness
  • We have also taken account of the approach adopted by HHJ Platts (sitting in the Manchester County Court) in Yates and Lorenzelli v. Nemo Personal Finance (14 May 2010) who considered that a commission of over 50% should be disclosed
  • We are aware that it is only one of a number of approaches that may have been taken in the county courts
  • In particular, we are aware of some findings in the county courts of unfair relationships in cases where commission was 45%. But we note that, firstly, this figure is not far from our proposed 50%, and secondly, that there were other considerations in those cases, including facts indicating mis‑selling had taken place, which would be considered under Step 1 in our approach where the seller and lender are the same firm. So we do not see cause in these cases to change our proposed 50%.
  • Adopting a presumptive 50% tipping point is not the same as saying that most or all consumers would think 50% was a reasonable level of commission to pay. Rather, undisclosed commission of 50% is the level at which we think it can be reasonably presumed that an unfair relationship was created.
  • It is important to note that such presumption is rebuttable: our approach allows for flexibility around that tipping point, including allowing that in some circumstances undisclosed commission of less than 50% may have created an unfair relationship in particular cases.
  • We consider that the level of the tipping point in the context of our approach is a matter of regulatory judgement.
  • We do not think that further information on consumer behaviour and preferences, or on firms’ costs, is necessary for seeking to justify the 50% tipping point or identifying potential alternatives.

There is an important conceptual distinction between commission being so high that it makes the whole relationship between lender and debtor unfair if not disclosed, and being too high economically in relation to efficiently incurred costs in a competitive market. We are concerned with the former, as this was the focus in Plevin, not the latter. We are not trying to regulate prices retrospectively or to redress economic detriment caused by high prices in an uncompetitive market.

We have also carefully considered whether our rules and guidance should set out different proportions for the presumption of unfairness for different types of PPI policy or sale (to reflect, for example, the potentially different costs associated with their distribution). However, we have not identified any compelling reasons why this approach is either necessary or appropriate. In particular, taking into account our knowledge of the PPI market and consistent with our proposed definition of commission, it is not obvious to us that differences in PPI distribution costs between firms, or between different PPI products of a firm, are relevant or show the need for different proportions to be set for the presumption of unfairness.

 The FCA has clearly recognised a difference between its approach and that of the various court decision handed down over the past few years.

Whilst the FCA appears to have power to provide guidance, the FCA’s jurisdiction to suggest an arbitrary tipping point is questionable. In a recent decision before the Administrative Court, the claims management company “We Fight any Claim” was unsuccessful in a challenge against the FCA as to the legality of a two-year compensation deadline (August 2019), and the FCA’s general approach. This application for judicial review of the FCA’s approach was unsuccessful.

The legality of the FCA’s approach is not the central thrust of this article. More importantly, the FCA and the credit industry needs to recognise that the civil courts are simply not bound by the persuasive authority of the FCA. As emphasised in the line of authorities recited above, the court is the ultimate decision-maker and may reject the FCA’s guidance that there ought to be rebuttable presumption of a tipping point at 50%. The courts may not be interested in any such “tipping point” at all, and it is notable that many of the authorities above were decided in the knowledge of the FCA’s proposed guidance at earlier stages.


 Unfortunately for the FCA and the banking/insurance industry, claimants, properly advised should be fully aware of the divergence of approach as between the regulator and the courts and it is likely that a substantial wave of litigation will inevitably follow.

This is certainly the position in cases where it can be shown that the customer would not have taken PPI or gone elsewhere, had they known the amount of the commission.

The well intentioned objective of the FCA to create a clear and consistent redress scheme may well be rejected by the courts, the ultimate decision maker.


Michael Muldoon

Muldoon Britton




[1] CP16/20 and CP15/39

[2] Unfair Relationships OFT Guidance May 2008

[3] Goode: Consumer Credit Law and Practice

[4] At 3.27

[5] FCA PS17/39

[6] At 4.80

[7] The decision is presently the subject of an application for permission to appeal – see https://casetracker.justice.gov.uk/search.do?search=we+fight

See also: The Times 9 August 2017 ” Fight goes on to extend deadline for PPI claims”


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