SC Plevin (Respondent) v Paragon Personal Finance Limited

[righty]

https://www.supremecourt.uk/decided-...essSummary.pdf
This matter was decided last week in the SC.

It overturns what many (including me) considered to be bad law re the matter of Harrison which decided that commissions paid to the lender/arranger for the customers PPI did NOT have to be disclosed to that customer therefore it did not constitute an unfair relationship

The SC judgment reverses this view completely in that the SC has decided that this DOES constitute an unfair relationship. Counsel for the respondent argued (& the court agreed) that withholding that information caused the Respondent to accept the PPI whereas If they had known the cost and the size of commissions and far exceeded the actual premium paid to the Norwich Union Insurance co (as was then) they probably would have sort considerably cheaper cover elsewhere. Anyway they were not advised they could seek alternative quotes thereby reducing the amount of the loan plus the additional high interest at a stroke

The Solicitors representing the respondent Plevin are I understand Miller Gardner of Manchester

[meellis]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

The way you have described the decision Righty makes me wonder if it could be applied to deals where the actual brokers fees have been added to the loan without any options of paying them in a different way.

[Fred]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

I take it that it would be reasonable to assume this would apply to any secret commissions added for any purpose.

[nemesis45]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

I take it that it would be reasonable to assume this would apply to any secret commissions added for any purpose.

I believe so Fred, Harrison was applied across the board this judgement should be treated in the same manner.

nem

[Fred]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

It would interesting to read what the court thinks/defines as the sums involved that trigger the "unfair relationships" & also what affect this will have on the possibility of "relief"...............very interesting keep us posted please "Righty"

[meellis]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

I must admit I am not interested in sums involved more the principle. Righty the way you have worded the synopsis is that the unfair part wasn't in relation to the sums involved but more the part that they were unable to obtain the same product for cheaper and not added to the loan because they were unaware of the true costs or their options if any. I am interested in whether any of this could be applied to set up and brokers fees which were added to the loan when there might have been better and cheaper options to pay them. Compounded broker fees on a 25yr loan can end up being quite significant and a better option maybe would have been to find the fees prior to the loan. The emphasis wouldn't be on whether the consumer had the funds to pay the fees up front but more on whether they understood the costs and were offered the chance.

[meellis]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

I must admit a certain amount of confusion around this decision. They are clearly relating it to the PPI in the decision but the decision was based on the facts that the PPI could have been too costly and Paragon were the only party to know the true costs hence the relationship was deemed unfair. Maybe I am reading too much into this but I wonder how the same reasoning could be applied to other products sold by the financial industry. With any product supplied by a third party through the supplier should there have been a need, based on fairness, to supply full detailed information of costs ? Anybody's thoughts would be welcome.

[Fred]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

I must admit a certain amount of confusion around this decision. They are clearly relating it to the PPI in the decision but the decision was based on the facts that the PPI could have been too costly and Paragon were the only party to know the true costs hence the relationship was deemed unfair. Maybe I am reading too much into this but I wonder how the same reasoning could be applied to other products sold by the financial industry. With any product supplied by a third party through the supplier should there have been a need, based on fairness, to supply full detailed information of costs ? Anybody's thoughts would be welcome.

How can you make an informed decision without knowing what it costs or in this case with costs attributed & known only by one party. Hiding information such as this has a fundamental effect on any consumer decision, you must ask "would the loan have been taken out if the true costs had been made available"

[meellis]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

That is what I am wondering Fred, I thought the decision was based on un-disclosed commission on PPI and solely a PPI thing but the way it reads to me is the decision is about the amount of information one party had and how it could be seen to be beneficial to withhold it. I just wonder how this could be applied elsewhere in unfairness cases.

[Fred]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

That is what I am wondering Fred, I thought the decision was based on un-disclosed commission on PPI and solely a PPI thing but the way it reads to me is the decision is about the amount of information one party had and how it could be seen to be beneficial to withhold it. I just wonder how this could be applied elsewhere in unfairness cases.

Well if the CCA 1974 140 "unfair relationships" apply as in these loans & as in through the SCLG (for secured) then for me it applies to all loans regulated/unregulated.

The "unfair relationship" rules are concise & very clear as is the SCLG...................................as for the enforcement & court decisions it this that is all over the place, not a question of what qualifies.

[meellis]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

Paragon supplied an unregulated loan with a PPI policy and a decision has been made and backed up by an appeal that Paragon were unfair by not disclosing information which was in their favour. I personally feel this is a line in the sand moment that could do with being tested further, I don't read it has an issue with un-disclosed commission I read it as an issue with withholding information relevant to the sale of the products that make up the whole deal.

[Fred]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

For me it is a "secret commission" a charge (which was also significant in cost) that is/was applied but made to look like something else hence making any decision on or around a mutually acceptable agreement subject to question under the terms above.

[righty]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

I would suggest it would/should apply to any undisclosed matter which has a substancial effect on the contract ie would the borrower have gone ahead or renegotiated to reduce the overall costs to them. Possibly but we'll never know because they weren't informed of all of the facts therefore an informed decision was not and could not be made by the borrowers

[righty]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

Also any lower court which doesn't agree with a matter before them which is clearly based on the evidence an unfair relationship will be appealed, something the lower courts will not want to happen

[Fred]

Re: SC Plevin (Respondent) v Paragon Personal Finance Limited

I really do not think there is much to argue on this as the CCA covers it well.........................it is far more of a problem as to why it keeps coming up for dispute on "unregulated" loans & why there is nothing in place to advise consumers of their basic rights.

ADR as in the FOS needs to play catch up big time on this, as I believe it not such a big issue for the courts, moreover a simple decision of a balanced agreement which is if defined within the FOS remit.

Consumers are at the serious risk of being disadvantaged due to the lack of regulation & affordable legal advice specialising in this subject. The whole dammed thing is one sided never mind just a particular case.