Tweet
In the spring of 2006 Michael and Patricia Saville ("the Savilles") decided to take out a loan to re-finance their existing indebtedness. They did a search on the internet. They came across the second defendant, Central Capital plc ("Central"), a credit broker, and made an enquiry. They were contacted by Central and ultimately entered into a loan agreement with the first defendant lender ("FirstPlus") to borrow a total sum of £54,500 repayable over 25 years. At the same time, also through the mediation of Central, the Savilles entered into a contract of payment protection insurance ("PPI") which protected them in the event of Michael Saville being unable to make the capital repayments and pay the interest on the loan by reason of his sickness or losing his job. The policy also covered the eventuality of the Savilles' deaths. The term of this insurance was 5 years. It was paid for by a lump sum premium, payable in advance and financed by a sum added to the loan. The PPI premium added £13,347.05 to the loan, which was subject to interest in the same way as the advance.
The Savilles raised a number of claims in connection with the sale to them of the PPI. All those claims came before District Judge Harrison in the Manchester County Court who, by an order dated 26 February 2013, dismissed them. Prominent amongst the claims at trial was the Savilles' assertion that Central impliedly represented to them that the PPI was compulsory if the loan was to be taken out. The Savilles' primary case was that they did not want PPI at all, but thought they had to take it. The District Judge did not accept the Savilles' evidence that they did not want PPI. He concluded that, when they entered into the contract, the Savilles were aware of the fact that the PPI was optional and that they could have contacted the insurers seeking further quotes without insurance.
The Savilles' secondary case was founded on their assertion that, if they had wanted insurance at all, they would have wanted the cover to last for the full period of the loan, and not just for the first 5 years. The District Judge found their evidence in this respect to be so contradictory that he was free to reject it.
It was common ground at the trial that in the course of selling the PPI policy to the Savilles, Central had not complied with certain of the Insurance Conduct of Business Rules then in force ("the ICOB rules"). The Savilles relied on the right of action conferred by section 150 of the Financial Services and Markets Act 2000 ("FSMA") which, at the material time, provided that:
"contravention of a rule is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty."
At the commencement of the trial Central accepted that it was in breach of certain ICOB rules in the course of arranging the PPI contract for the Savilles. I set these rules out below, but it is sufficient at this stage to say that the rules are those which impose a general duty to ensure that any recommended insurance policy meets the demands and needs of the customer, as well as more specific duties to carry out a process of seeking out and assessing relevant information about the customer's requirements. As they had failed to make any enquiries at all of the Savilles as to the period for which the Savilles would wish to have PPI, the concession was obviously correctly made.
The District Judge's conclusion about the Savilles' claim that they did not want the insurance at all was expressed in the following way (at paragraph 46 of his judgment):
"I can think of no rational explanation, the Claimants having read the documentation, understood the terms of the insurance and entered into the agreement, no rational explanation for them doing so other than that is what they chose. That is what they wanted. So leaving aside any issues of breach of regulation admitted or otherwise, the Claimants got what they wanted and understood it fully."
Turning to the claim for breach of statutory duty, in paragraph 48, the Judge pointed out that the action conferred by section 150 was not one of strict liability, but involved the ordinary rules of causation in tort. Applying the reasoning from the passage quoted in the previous paragraph of my judgment, he said that causation was not established because the Savilles purchased the policy in full knowledge of its terms.
The narrow issue raised by this appeal, brought with the permission of Lewison LJ, is whether the judge was right to conclude that the Savilles had not established any loss causally attributable to Central's breach of statutory duty.
More...
The Savilles raised a number of claims in connection with the sale to them of the PPI. All those claims came before District Judge Harrison in the Manchester County Court who, by an order dated 26 February 2013, dismissed them. Prominent amongst the claims at trial was the Savilles' assertion that Central impliedly represented to them that the PPI was compulsory if the loan was to be taken out. The Savilles' primary case was that they did not want PPI at all, but thought they had to take it. The District Judge did not accept the Savilles' evidence that they did not want PPI. He concluded that, when they entered into the contract, the Savilles were aware of the fact that the PPI was optional and that they could have contacted the insurers seeking further quotes without insurance.
The Savilles' secondary case was founded on their assertion that, if they had wanted insurance at all, they would have wanted the cover to last for the full period of the loan, and not just for the first 5 years. The District Judge found their evidence in this respect to be so contradictory that he was free to reject it.
It was common ground at the trial that in the course of selling the PPI policy to the Savilles, Central had not complied with certain of the Insurance Conduct of Business Rules then in force ("the ICOB rules"). The Savilles relied on the right of action conferred by section 150 of the Financial Services and Markets Act 2000 ("FSMA") which, at the material time, provided that:
"contravention of a rule is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty."
At the commencement of the trial Central accepted that it was in breach of certain ICOB rules in the course of arranging the PPI contract for the Savilles. I set these rules out below, but it is sufficient at this stage to say that the rules are those which impose a general duty to ensure that any recommended insurance policy meets the demands and needs of the customer, as well as more specific duties to carry out a process of seeking out and assessing relevant information about the customer's requirements. As they had failed to make any enquiries at all of the Savilles as to the period for which the Savilles would wish to have PPI, the concession was obviously correctly made.
The District Judge's conclusion about the Savilles' claim that they did not want the insurance at all was expressed in the following way (at paragraph 46 of his judgment):
"I can think of no rational explanation, the Claimants having read the documentation, understood the terms of the insurance and entered into the agreement, no rational explanation for them doing so other than that is what they chose. That is what they wanted. So leaving aside any issues of breach of regulation admitted or otherwise, the Claimants got what they wanted and understood it fully."
Turning to the claim for breach of statutory duty, in paragraph 48, the Judge pointed out that the action conferred by section 150 was not one of strict liability, but involved the ordinary rules of causation in tort. Applying the reasoning from the passage quoted in the previous paragraph of my judgment, he said that causation was not established because the Savilles purchased the policy in full knowledge of its terms.
The narrow issue raised by this appeal, brought with the permission of Lewison LJ, is whether the judge was right to conclude that the Savilles had not established any loss causally attributable to Central's breach of statutory duty.
More...
