“Commissions, Fiduciary Responsibility,Section 140A of the Consumer Credit Act 2006 Please advise if you have received any commissions by the insurer for arranging the Policy and if so how much, how this was disclosed to our client, and what affect this had on the decision of your company to sell the Policy to our client. Your breaches of statutory duty and negligence We believe that your sale of the Policy breached the FCA's Principles, in particular, Principle 6, Principle 7 and Principle 9. However, the manner which the Policy was sold to our client would also have breached guidance provided by previous regimes (e.g ABI, GISC, FLA) that you may have subscribed to. In addition, we believe such actions and omissions as detailed within this letter are in breach ofs.2(1) Misrepresentation Act 1967 . Further, in your capacity as a professional financial Institution you owed our client a common law duty of care not to make negligent misrepresentations by making false statements, using words in a reckless manner, creating a misleading Impression and/or giving the wrong information about the Policy. Redress sought Our client has suffered loss as a result of your negligence, misrepresentation and breach of statutory duty. The redress we seek is for you to return our client to the position he would have been in had he not been sold the policy. This includes (not exhaustively) a full refund of the premium, interest charged on the premium and statutory interest at the rate of 8% in accordance withSection 69 of the County Courts Act 1984 , from inception of the Policy.”
“I confirm that I want to make a formal complaint about the sale of the payment protection insurance described in this questionnaire.”
“In view of the above I believe that the information provided was clear, fair and not misleading and would have enabled your client to make an informed choice about the policy.”
“… we confirm that we are instructed by our client to accept your offer in full and final settlement of his claim for his mis-sold [PPI]. Please find attached hereto our client’s duly completed acceptance authority. Please make the payment as per our client’s instructions and we would be grateful if you could notify us once our client’s settlement has been processed.”
“I/We hereby accept the sum of£1095.75 in full and final settlement of my/our complaint.”
“Claim for damages and other monetary relief arising from an unfair relationship between [Mr Harrop] and [Skipton] pursuant tosection 140A of the Consumer Credit Act 1974 .”
“they do no more than require Skipton to offer redress, which Mr Harrop was entitled to accept or reject as he chose or as he was advised.”
“Paragon v Plevin – Commission Complaint Issue We reiterate that the breach of these regulations has caused an unfair relationship to exist. This was due to your failure to disclose to our client the amount of commission that fell to form part of the PPI payment. This breach qualifies our client for relief under s. 140 CCA. Had our client been aware of the level of commission payment, they would not have taken out PPI on the account. … The level of commission payment, which you failed to convey to our client, rendered the relationship between you unfair. In light of this, please review all of the circumstances regarding the potential mis-sale of this product to our client. Our client is seeking repayment of all premiums and associated interest paid, together with 8% statutory interest on the total sum. As you can see from our authority, our clients have authorised us to receive the claim on their behalf, and so we would be grateful if you would forward your refund to the above address making all cheques payable to [UC4M]. We will disperse funds accordingly to our clients.”
“You may be due redress in respect of undisclosed commission charged by [Santander] (commonly referred to as a Plevin complaint). We will consider this aspect of redress pending further advice from our regulators. We will write to you again in due course to tell you our view on this aspect of your complaint, and on whether you can potentially refer this aspect of your complaint to the Financial Ombudsman Service.”
“PLEASE SIGN BELOW IN ALL INSTANCES I understand that, by signing below, I am accepting the payment in full and final settlement of my non-disclosure of commission complaint (“the Complaint”). I agree that by accepting the payment, this fully settles the Complaint against [Santander] and that [Santander has] no further liability to me. If I raise further issues on the same or similar terms, I understand that [Santander] may choose to rely on this acceptance form as proof that such issues have already been settled. … I want to accept the above offer of redress in full and final settlement of my complaint against [Santander].” [Emphasis here and above in the original]
“If the commission on the PPI had been charged at a rate which meant there was no unfair relationship you would have been charged less for the PPI. If you paid off your balance in full regularly, you would have paid less to do so. If you didn't pay off your balance in full, your statement balances would've been lower (because you would've been charged less for PPI), and so you'd also have been charged less interest. In reconstructing your account, we've worked out each month how much less the PPI would've cost you, how much less interest you would've paid, and whether your monthly repayments were more than they should've been. If you were charged any overlimit fees, we've worked out whether you would still have incurred them if the PPI had been charged at a lower rate. Any fees that should not have been charged will be included in the redress calculation. If the monthly payments you made were higher than they should have been, we've refunded the difference (fig A), and added compensatory interest (fig B) to that difference. At the end of the reconstruction period - which will either be now if the account is still open, or the time when your account closed - we work out how much lower than the actual balance the reconstructed balance would have been. We refund that amount to you as well (fig E).”
“An unfair relationship exists or existed between [Ms Self] and [Santander] within the meaning ofs. 140A Consumer Credit Act 1974 (“the Act”) as a result of undisclosed commission earned or obtained by [Santander] in relation to a payment protection insurance policy funded in accordance with a credit agreement between the parties.”
“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). … (4) A determination may be made under this section in relation to a relationship notwithstanding that the relationship may have ended. … 140B Powers of court in relation to unfair relationships (1) An order under this section in connection with a credit agreement may do one or more of the following— (a) require the creditor, or any associate or former associate of his, to repay (in whole or in part) any sum paid by the debtor or by a surety by virtue of the agreement or any related agreement (whether paid to the creditor, the associate or the former associate or to any other person); (b) require the creditor, or any associate or former associate of his, to do or not to do (or to cease doing) anything specified in the order in connection with the agreement or any related agreement; … (f) alter the terms of the agreement or of any related agreement; … (2) An order under this section may be made in connection with a credit agreement only— (a) on an application made by the debtor or by a surety; … (9) If, in any such proceedings, the debtor or a surety alleges that the relationship between the creditor and the debtor is unfair to the debtor, it is for the creditor to prove to the contrary. 140C Interpretation of ss. 140A and 140B (1) In this section and in sections 140A and 140B ‘credit agreement’ means any agreement between an individual (the ‘debtor’) and any other person (the ‘creditor’) by which the creditor provides the debtor with credit of any amount.
“16 It can be seen that, in dealing with a claim by a debtor under these provisions, the court is required to follow a two-stage process. The first stage is to determine whether the relationship between the creditor and the debtor arising out of the credit agreement is unfair to the debtor because of one or more of the matters specified in section 140A(1). If the court finds that the relationship is unfair for that reason, the court must then proceed to the second stage and decide what, if any, order to make, selecting from the list of options in section 140B(1). 17 Some further general points may be made which are apparent on the face of sections 140A-140C. 18 First, under section 140A(1) it is not the fairness or otherwise of the credit agreement which the court must determine: it is whether the relationship between the creditor and the debtor arising out of the credit agreement (on its own or taken with any related agreement) is unfair to the debtor. A relationship, by its nature, extends over a period of time and may continue for as long as there is any sum payable or which will or may become payable under the credit agreement. 19 Second, the question to be determined under section 140A(1) is not whether the relationship between the creditor and the debtor was unfair to the debtor when the credit agreement was made or at some other time in the past. It is whether the relationship is unfair to the debtor, i e at the time when the determination is made. This is reinforced by section 140B(9)… which is likewise framed in the present tense. 20 If nothing further had been said, it might have been thought impossible to make a determination of unfairness under section 140A if the relationship between the creditor and the debtor has ended before the hearing takes place. But this contingency is catered for by subsection (4). That provides that a determination may be made under section 140A in relation to a relationship “notwithstanding that the relationship may have ended”
“Section 140A is deliberately framed in wide terms with very little in the way of guidance about the criteria for its application, such as is to be found in other provisions of the Act conferring discretionary powers on the courts. It is not possible to state a precise or universal test for its application, which must depend on the court’s judgment of all the relevant facts. Some general points may, however, be made. First, what must be unfair is the relationship between the debtor and the creditor. … Secondly, although the court is concerned with hardship to the debtor, subsection 140A(2) envisages that matters relating to the creditor or the debtor may also be relevant. There may be features of the transaction which operate harshly against the debtor but it does not necessarily follow that the relationship is unfair. These features may be required in order to protect what the court regards as a legitimate interest of the creditor. Thirdly, … . Fourthly, the great majority of relationships between commercial lenders and private borrowers are probably characterised by large differences of financial knowledge and expertise. It is an inherently unequal relationship. But it cannot have been Parliament’s intention that the generality of such relationships should be liable to be reopened for that reason alone.”
“The fundamental difference is that the ICOB Rules impose obligations on insurers and insurance intermediaries. Section 140A, by comparison, does not impose any obligation and is not concerned with the question whether the creditor or anyone else is in breach of a duty. It is concerned with the question whether the creditor’s relationship with the debtor was unfair. It may be unfair for a variety of reasons, which do not have to involve a breach of duty. There are other differences, which flow from this. The ICOB Rules impose a minimum standard of conduct applicable in a wide range of situations, enforceable by action and sounding in damages. Section 140A introduces a broader test of fairness applied to the particular debtor-creditor relationship, which may lead to the transaction being reopened as a matter of judicial discretion. … Most of the ICOB Rules, including those relating to the disclosure of commission, impose hard-edged requirements, whereas the question of fairness involves a large element of forensic judgment. It follows that the question whether the debtor-creditor relationship is fair cannot be the same as the question whether the creditor has complied with the ICOB Rules, and the facts which may be relevant to answer it are manifestly different. An altogether wider range of considerations may be relevant to the fairness of the relationship, most of which would not be relevant to the application of the rules. They include the characteristics of the borrower, her sophistication or vulnerability, the facts which she could reasonably be expected to know or assume, the range of choices available to her, and the degree to which the creditor was or should have been aware of these matters. ”
“A sufficiently extreme inequality of knowledge and understanding is a classic source of unfairness in any relationship between a creditor and a non-commercial debtor. It is a question of degree. Mrs Plevin must be taken to have known that some commission would be payable to intermediaries out of the premium before it reached the insurer. The fact was stated in the FISA borrowers’ guide and, given that she was not paying LLP for their services, there was no other way that they could have been remunerated. But at some point commissions may become so large that the relationship cannot be regarded as fair if the customer is kept in ignorance. At what point is difficult to say, but wherever the tipping point may lie the commissions paid in this case are a long way beyond it. … Any reasonable person in [Mrs Plevin’s] 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.” [Emphasis added because these words have been referred to repeatedly by the parties on either side.]
“19 … Bearing in mind the breadth of section 140A and the incidence of the burden of proof according to section 140B(9), the creditor must normally be regarded as responsible for an omission making his relationship with the debtor unfair if he fails to take such steps as (i) it would be reasonable to expect the creditor or someone acting on his behalf to take in the interests of fairness, and (ii) would have removed the source of that unfairness or mitigated its consequences so that the relationship as a whole can no longer be regarded as unfair. 20 On that footing, I think it clear that the unfairness which arose from the non-disclosure of the amount of the commissions was the responsibility of Paragon. Paragon were the only party who must necessarily have known the size of both commissions. They could have disclosed them to Mrs Plevin. Given its significance for her decision, I consider that in the interests of fairness it would have been reasonable to expect them to do so. Had they done so this particular source of unfairness would have been removed because Mrs Plevin would then have been able to make a properly informed judgment about the value of the PPI policy. This is sufficiently demonstrated by her evidence that she would have questioned the commissions if she had known about them, even if the evidence does not establish what decision she would ultimately have made.”
“The Plevin decision introduced a significant new uncertainty into an already uncertain landscape, where the long tail of PPI complaints looked set to continue. So we have used our regulatory judgement to create a framework that we believe will reduce uncertainty and enable firms to take a fair and consistent approach to handling PPI complaints. This will help ensure the best outcomes for consumers at the earliest stage in the complaint process, and will make it easier for us to act if we become concerned that firms are not handling complaints appropriately.”
“We recognise that disclosure of commission to consumers was not required by our insurance conduct of business rules (ICOB/ICOBS), so firms’ failure to disclose was not in breach of those rules at the time (or the industry codes which preceded them), and is unlikely in and of itself to have been a breach of our Principles. However, the Plevin decision is in the public domain. Following the Plevin judgment, some complaints have already been made to firms and to the Financial Ombudsman Service about lack of commission disclosure in PPI sales. CMCs are well aware of the Plevin judgment and PPI complaints referencing Plevin and undisclosed commission are being made in growing volumes. Given that firms are required to assess complaints fairly, including taking into account relevant decisions from the Financial Ombudsman Service, and that the Financial Ombudsman Service is required to take into account the general law when deciding complaints in accordance with its fair and reasonable remit, Plevin cannot be ignored. But firms are uncertain how they should take the judgment into account in the context of PPI complaints made to them and their interpretation of Plevin varies. So, the issue is how best to address the judgment. We carefully considered whether the availability of the Financial Ombudsman Service alone is enough or whether there should be regulatory intervention. Overall, we continue to think that the rationale for us exercising our regulatory judgement about appropriate assessment and, where appropriate, redress of relevant PPI complaints in light of s.140A‑B, taking account of Plevin, and making rules and guidance now for firms to follow, is stronger, because: • Firms will then take a fair and consistent approach to handling Plevin complaints. Otherwise, given the variety of industry views of Plevin’s significance, it is likely that individual firms would adopt different approaches to handling these complaints. This would create inconsistency in PPI complaints handling and be likely to increase demands on the Financial Ombudsman Service. Additionally, many consumers might not complain to the Financial Ombudsman Service, to their potential detriment. • Our ability to take future action is improved. By giving firms a clear idea of how we expect relevant complaints to be dealt with in light of Plevin, it will be easier for us to ensure that firms act fairly and consistently. • It is more appropriate for us, as a policy making body, to set out a framework approach in rules and guidance. The FCA has the power to make rules and guidance to help ensure firms reach fair and consistent outcomes for complainants on cases with common issues and similar facts. This helps to ensure the best outcomes for consumers when making complaints to firms at the earliest stage in the complaint process. The Financial Ombudsman Service focuses on individual cases and will continue to take our rules and guidance, among other things, into account when determining cases on a fair and reasonable basis in light of all the circumstances. … 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. … We are not asserting that the Supreme Court created a set of binding rules that can be applied strictly across to all PPI complaints where non‑disclosure of commission is relevant. Instead, we are exercising our regulatory judgement about appropriate assessment and, where appropriate, redress of relevant PPI complaints in light of s.140A‑B, taking account of Plevin. We are not proposing a mechanical test or mandatory redress. Our provisions all take the form of either guidance or evidential provisions. Additionally, the provisions explicitly direct that individual case circumstances (‘all relevant matters’) should be taken into account, explicitly highlight the scope for rebuttal of the presumption of an unfair relationship, and include specific examples of circumstances where rebuttal might be appropriate or where firms should consider paying more redress than the excess over 50% … . (Emphasis in this paragraph added) … Our aim is to provide consistency of interpretation and outcome to relevant PPI complaints in light of Plevin while also ensuring there is flexibility for firms to take into account the circumstances of every case. We think this approach is consistent with the aim of the Civil Procedure Rules which is to encourage alternative methods of dispute resolution. Consumers will remain free to go to the courts, including if they desire the kind of assessment a judge would undertake. However, having the fair alternative of our rules and guidance may help avoid an increased flow of cases to the courts, with all of the challenges and costs that might involve for consumers and firms. Our intervention will help to ensure that, in the particular context of PPI complaints where Plevin is relevant, the framework of our complaint handling rules for firms and the availability of the Financial Ombudsman Service continues to provide its usual simpler, more informal and free‑to‑the‑consumer route to an assessment and potential redress of relevant expressions of dissatisfaction. We agree that the courts themselves are likely to give some weight to what we, as the sector regulator, set out as our approach.”
“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. Specifically: • 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. … • 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.”
“1.4.1R Once a complaint has been received by a respondent, it must: (1) investigate the complaint competently, diligently and impartially, obtaining additional information as necessary; (2) assess fairly, consistently and promptly: (a) the subject matter of the complaint; (b) whether the complaint should be upheld; (c) what remedial action or redress (or both) may be appropriate; (d) if appropriate, whether it has reasonable grounds to be satisfied that another respondent may be solely or jointly responsible for the matter alleged in the complaint; taking into account all relevant factors; (3) offer redress or remedial action when it decides this is appropriate; (4) explain to the complainant promptly and, in a way that is fair, clear and not misleading, its assessment of the complaint, its decision on it, and any offer of remedial action or redress; and (5) comply promptly with any offer of remedial action or redress accepted by the complainant. 1.4.2G Factors that may be relevant in the assessment of a complaint under DISP 1.4.1R (2) include the following: (1) all the evidence available and the particular circumstances of the complaint; (2) similarities with other complaints received by the respondent; (3) relevant guidance published by the FCA, other relevant regulators, the Financial Ombudsman Service or former schemes; and (4) … .” (1) investigate the complaint competently, diligently and impartially, obtaining additional information as necessary; (2) assess fairly, consistently and promptly: (a) the subject matter of the complaint; (b) whether the complaint should be upheld; (c) what remedial action or redress (or both) may be appropriate; (d) if appropriate, whether it has reasonable grounds to be satisfied that another respondent may be solely or jointly responsible for the matter alleged in the complaint; (3) offer redress or remedial action when it decides this is appropriate; (4) explain to the complainant promptly and, in a way that is fair, clear and not misleading, its assessment of the complaint, its decision on it, and any offer of remedial action or redress; and (5) comply promptly with any offer of remedial action or redress accepted by the complainant. (1) all the evidence available and the particular circumstances of the complaint; (2) similarities with other complaints received by the respondent; (3) relevant guidance published by the FCA, other relevant regulators, the Financial Ombudsman Service or former schemes; and (4) … .”
“(1) This appendix sets out how… a firm should handle complaints relating to the sale of a payment protection contract by the firm which express dissatisfaction about the sale, or matters related to the sale, including where there is a rejection of claims on the grounds of ineligibility or exclusion (but not matters unrelated to the sale, such as delays in claims handling) … .” • App 3.1.4AG: “At step 2, the aspects of complaint handling dealt with in this appendix are how a CCA lender should: (1) assess a complaint to establish whether failure to disclose commission gave rise to an unfair relationship under section 140A of the CCA; and (2) determine the appropriate redress (if any) to offer to a complainant.” • App 3.2.1G: “The firm should consider, in the light of all the information provided by the complainant and otherwise already held by or available to the firm, whether (at step 1) there was a breach or failing by the firm or (at step 2) whether there was a failure to disclose commission.” • “App 3.3A.2E: Where the firm did not disclose to the complainant in advance of a payment protection contract being entered into (and is not aware that any other person did so at that time): (1) the anticipated profit share plus the commission known at the time of the sale; or (2) the anticipated profit share plus the commission reasonably foreseeable at the time of the sale; or (3) the likely range in which (1) or (2) would fall; the firm should consider whether it can satisfy itself on reasonable grounds that this did not give rise to an unfair relationship under section 140A of the CCA. The firm’s consideration of unfairness should take into account all relevant matters, including whether the non-disclosure prevented the complainant from making a properly informed judgement about the value of the payment protection contract.” • App 3.3A.4E: “(1) The firm should presume that failure to disclose commission gave rise to an unfair relationship under section 140A of the CCA if: (a) the anticipated profit share plus the commission known at the time of the sale; or (b) the anticipated profit share plus the commission reasonably foreseeable at the time of the sale; was: (c) in relation to a single premium payment protection contract, more than 50% of the total amount paid in relation to the payment protection contract; or (d) in relation to a regular premium payment protection contract, at any time in the relevant period or periods more than 50% of the total amount paid in relation to the payment protection contract in respect of the relevant period or periods. (2) The firm should presume that failure to disclose commission did not give rise to an unfair relationship under section 140A of the CCA if the test in (1) is not satisfied. • App 3.3A.5G: “The presumption that failure to disclose commission gave rise to an unfair relationship is rebuttable. …” • App 3.7A.2E: “Where the firm concludes in accordance with DISP App 3.3A that the non-disclosure has given rise to an unfair relationship under section 140A of the CCA, the firm should remedy the unfairness.” • App 3.7A.3AE: “In relation to a regular premium payment protection contract, the firm should pay to the complainant in respect of each redress period a sum equal to: (1) an amount appropriately representing the commission paid in respect of that period; plus (2) an amount appropriately representing profit share in respect of that period; minus (3) 50% of the amount appropriately representing the total amount paid in respect of that period (or other percentage as in DISP App 3.7A.4E). A firm should pay the aggregate of those sums and also pay historic interest in relation to each of those sums, where relevant. It should also pay simple interest, where relevant.” • App 3.8.3E: “The remedies in DISP App 3.7A are not exhaustive.” • App 3.8.4E: “A firm should depart from the remedies set out in n DISP App 3.7A if there are factors in a particular complaint which require a different amount or form of redress in order to remedy the unfairness found.” (1) assess a complaint to establish whether failure to disclose commission gave rise to an unfair relationship under section 140A of the CCA; and (2) determine the appropriate redress (if any) to offer to a complainant.” (1) the anticipated profit share plus the commission known at the time of the sale; or (2) the anticipated profit share plus the commission reasonably foreseeable at the time of the sale; or (3) the likely range in which (1) or (2) would fall; the firm should consider whether it can satisfy itself on reasonable grounds that this did not give rise to an unfair relationship under section 140A of the CCA. The firm’s consideration of unfairness should take into account all relevant matters, including whether the non-disclosure prevented the complainant from making a properly informed judgement about the value of the payment protection contract.” (a) the anticipated profit share plus the commission known at the time of the sale; or (b) the anticipated profit share plus the commission reasonably foreseeable at the time of the sale; was: (c) in relation to a single premium payment protection contract, more than 50% of the total amount paid in relation to the payment protection contract; or (d) in relation to a regular premium payment protection contract, at any time in the relevant period or periods more than 50% of the total amount paid in relation to the payment protection contract in respect of the relevant period or periods. (2) The firm should presume that failure to disclose commission did not give rise to an unfair relationship under section 140A of the CCA if the test in (1) is not satisfied. (1) an amount appropriately representing the commission paid in respect of that period; plus (2) an amount appropriately representing profit share in respect of that period; minus (3) 50% of the amount appropriately representing the total amount paid in respect of that period (or other percentage as in DISP App 3.7A.4E). A firm should pay the aggregate of those sums and also pay historic interest in relation to each of those sums, where relevant. It should also pay simple interest, where relevant.”
“In Vanbergen v. St. Edmunds Properties Ltd. [1933] 2 K.B. 223, 231, Lord Hanworth M.R. said: "It is a well established principle that a promise to pay a sum which the debtor is already bound by law to pay to the promisee does not afford any consideration to support the contract." More recently in D. & C. Builders Ltd. v. Rees [1966] 2 Q.B. 617 this court also applied Foakes v. Beer, Danckwerts L.J. saying, at p. 626, that the case "settled definitely the rule of law that payment of a lesser sum than the amount of a debt due cannot be a satisfaction of the debt, unless there is some benefit to the creditor added so that there is an accord and satisfaction."” "It is a well established principle that a promise to pay a sum which the debtor is already bound by law to pay to the promisee does not afford any consideration to support the contract." "settled definitely the rule of law that payment of a lesser sum than the amount of a debt due cannot be a satisfaction of the debt, unless there is some benefit to the creditor added so that there is an accord and satisfaction."”
“6-094 At common law, the general rule is that a creditor is not bound by a promise to accept part payment in full settlement of a debt. An accrued debt can be discharged by the creditor’s promise only if the promise amounts to or gives rise to an effective accord and satisfaction. A counter promise by the debtor to only pay part of the debt provides no consideration for the accord as it is merely a promise to perform part of an existing duty owed to the creditor. … 6-101 The rule stated in 6-094 does not apply where the creditor’s claim or its amount is disputed in good faith. In such a case, the value of the creditor’s claim is doubtful, and the debtor therefore provides consideration by paying something even though it is lesser than the amount claimed. Unliquidated claims 6-102 For reasons similar to those given in 6-101 above, the general rule applies only if the original claim is a liquidated one, i.e., a claim for a fixed sum of money, such as one for money lent or for the agreed price of goods or services. It does not apply where the creditor’s claim is an unliquidated one, such as a claim for damages or for a reasonable remuneration where none is fixed by the contract. The value of such a claim is again uncertain. And even if the overwhelming probability is that it is worth more than the sum paid, the possibility that it may be worth less suffices to satisfy the requirements of consideration.”
“I do not owe you anything” or “I owe you only a comparatively small sum but I am willing to pay you£8,847 ”: see page 277. Instead the letter was treated as “in effect, making an admission that that sum was due”
“500. Mr Lord’s third submission was that the Settlement Deed was a bona fide compromise of the CCA claims and if it could be unpicked, it would never be possible to settle a CCA claim. That cannot have been intended by the legislature. There appears to be no relevant authority on the CCA itself, but he referred, by way of analogy, to Binder v Alachouzos[1972] 2 QB 151 . The plaintiff had sued the defendant on a number of loans, the defendant defending the action on the grounds that the plaintiff was an unregistered moneylender. The action was compromised shortly before trial, the defendant agreeing to abandon the contention that the plaintiff was a moneylender and to pay the plaintiff various sums. When he defaulted and the plaintiff sued him on the compromise agreement, the defendant contended that it was not binding, again relying on the Moneylenders Acts. The Court of Appeal held that he was bound by the agreement. Lord Denning MR said that the Moneylenders Acts were for the protection of borrowers and the judges would not therefore allow a moneylender to use a compromise as a means of getting round the Act; but it was important that the courts should enforce compromises agreed in good faith between lender and borrower (at 158A-B, D-F): “If the court is satisfied that the terms are fair and reasonable, then the compromise should be held binding. For instance, if there is a genuine difference as to whether the lender is a moneylender or not, then it is open to the parties to enter into a bona fide agreement of compromise. Otherwise there could never be a compromise of such an action. Every case would have to go to court for final determination and decision. That cannot be right…. In my judgment, a bona fide compromise such as we have in the present case (where the dispute is as to whether the plaintiff is a moneylender or not) is binding. It cannot be reopened unless there is evidence that the lender has taken undue advantage of the situation of the borrower. In this case no undue advantage was taken. Both sides were advised by competent lawyers on each side. There was a fair arguable case for each. The case they reached was fair and reasonable. It should not be reopened.”
“ought to be very slow to look behind an agreement reached in circumstances like these.”
“it is the law of this country, as Lord Denning MR has said, where there is a bona fide compromise of an existing dispute and that compromise includes a compromise of what, as Mr Joseph said, is basically an issue of fact, namely whether there had in fact been unlawful moneylending, especially where the compromise has been reached under the advice of counsel and solicitors, that that compromise is enforceable against the party seeking subsequently to repudiate it.” 501. There is an obvious danger in holding that any agreement settling CCA claims is effective to oust the Court’s powers under ss. 140A-C of the CCA, as it would open the way to lenders routinely requiring borrowers to settle any possible CCA claims, which would run the risk, as Mr Stewart submitted, of driving the proverbial coach and horses through the protection afforded by the CCA. 502. Moreover, in Binder the Court of Appeal appears to have laid emphasis on the fact that what was involved was a bona fide compromise of a genuine issue of fact as to whether the Moneylenders Acts applied at all. That principle has been applied to other statutory provisions: cf Foskett on Compromise (8th edn) at §7-32 (although parties cannot contract out of the protection of the Rent Acts, that does not prevent a bona fide compromise of a genuine dispute of fact as to whether a statutory provision applies); A-G v Trustees of the British Museum[2005] EWHC 1089 (Ch) at [28] per Morritt V-C (a bona fide compromise could be made of the question whether a statutory prohibition on disposal of objects vested in the trustees as part of the museum’s collection applied); and FPH Law v Brown[2016] EWHC 1681 (QB) at [29] per Slade J (a bona fide compromise of an issue as to the enforceability of a CFA). But if that is the principle, it does not directly assist CPC. There was no issue, or none at any rate that has been identified, as to whether the agreements preceding the Settlement Deed were credit agreements such that the CCA applied. What was compromised was not any genuine issue of fact which went to the applicability of the CCA. What was compromised was any claim that Mr Holyoake had under the CCA. 503. I proceed therefore on the basis that the Settlement Deed does not act as a jurisdictional bar to the Court considering whether the relationship between the parties was unfair, both in the period up to and including the entry of the Deed and in the period thereafter. 504. On the other hand that does not mean the Settlement Deed is just to be ignored as if it did not exist. The policy considerations referred to in Binder – that it is the policy of the Court to encourage good faith compromises, and to enforce compromises when they are made – seem to me to continue to apply. In considering whether the relationship between the parties is unfair, or in considering what order, if any, to make in the exercise of the discretion in s. 140B, it seems to me highly relevant that the parties have reached a compromise of that issue, and for this purpose the matters referred to by the Court of Appeal in Binder – was there a genuine dispute, was there a fair arguable case on each side, was the compromise bona fide or were its terms colourable, are the terms fair and reasonable, has the lender taken undue advantage of the borrower, were both sides advised by competent lawyers – are just as applicable. Roskill LJ gave an example at 160D-E of a liquidator seeking the sanction of the court to a compromise where there is a moneylending defence: “Is the court to investigate the whole matter, or can it look at the matter broadly and see whether a bona fide compromise should be arrived at or has been arrived at? In such a case it seems to me clear that the court should encourage and when appropriate enforce any bona fide compromise arrived at, especially one arrived at under legal advice.”
“31. It is agreed and it is right that the court retains a jurisdiction to determine that the relationship was unfair and to provide additional redress even where there has been a valid contract of compromise in circumstances where unfairness means that the court should exercise its discretion to do so (under s.140A to C of the Consumer Credit Act). Here, the argument is that the terms of any purported settlement are argued not to be fair and reasonable because the amount was manifestly insufficient to remedy the unfairness and that the FCA's position that the bank should be entitled to retain 50 percent is of itself unfair and indefensible and that the undisclosed commission was so large that the failure to disclose could never be described as fair. 32. The fact that the court has a power to look beyond any agreement in these limited consumer circumstances does not mean that the court will or should ride roughshod over a valid contract of acceptance or compromise between two parties. The power exists to ensure there is a mechanism to redress unfairness and exists to protect consumers. The Claimant argued this point well but, in my view, I cannot find that the FCA methodology, when applied, produces an inherently unfair result that means the court will likely look behind those circumstances in this case. In my view, the FCA methodology is not an absolute. It creates only a rebuttable presumption for its members to apply and there is nothing requiring any Claimant to accept the resultant figure. 33. Here, the indicators of whether the agreement was fair are that the Claimant was, in my finding, provided with a very detailed and clear explanation of the bases of the calculation used by Skipton. The Claimant had the benefit of a claims management company/advisors at the time who professed to have expertise in this area. The Claimant was informed that he did not have to accept the sum and had the right to take the matter to the ombudsman or court and only after all of that information was provided was settlement entered into and so standing back and looking at the process generally in this case, it was, in my view, patently fair. The Claimant's representatives/agents could have asked if the money could be accepted in part payment but did not. They accepted the only offer put forward without qualification until a very long time later. There was no proximate attempt to say that the compromise was not final. 34. In terms of the argument that the whole FCA scheme results in inherent unfairness, I have to approach that argument with more than a degree of caution. If this were the case, then the logical outcome would be that it is impossible in any consumer case, where the regulator's best practice guidance is followed, to conclude a valid contract of compromise with any certainty. That cannot be right. The correct approach, in my view, is to understand that the FCA scheme provides a broad brush method for addressing a built in presumption of unfairness. There is nothing to prevent banks from offering more or rebutting that presumption and there is nothing preventing the Claimant from rejecting that approach if, in their circumstances, they believe the FCA model to be inadequate or inequitable redress and the measure of fairness must be looked at as a whole based on the entire facts of the case, as I believe I have done here. There is no requirement in my view for the bank to go so far as to disclose the actual costs incurred in assisting with the provision of MPPI, which is what was argued.”
“In your case, the amount we received as commission and profit share (which we’ll refer to simply as ‘commission’) was more than 50% of the premiums you paid. Therefore we’d like to offer you£830.84 in full and final settlement of your complaint and any claim that you have against [Santander] … in respect of RND commission.”
“38. Ultimately, however, I have reached the conclusion that I should dismiss this Ground of Appeal. Although· the Learned Deputy District Judge did at least arguably fail in material respects apparently to articulate or apply the correct approach in principle, as I have explained above, it is trite law that appeals are against Orders and not judgments or reasons. In my judgment, the Learned Deputy District Judge's ultimate conclusion on the point was not wrong, even if it could, with the benefit of hindsight, have been reasoned modestly differently. Further, I am satisfied that, applying the correct principles set out above myself, the facts in this case inevitably require that the same conclusion be reached as was in fact reached by the Learned Deputy District Judge. In fact, as set out above, the Learned Deputy District Judge himself referred to nearly all of the important matters in reaching his conclusion.”
“However, in my judgment, the compromise between the parties in the form of the signature and return of the CAF and the subsequent payment of the Purported Settlement did "cure" that historical unfairness and render the relationship a fair one. The Respondent has satisfied me ultimately that the parties' relationship is fair. Having regard to Holyoake there was, in my view, looking at the matter broadly, a bona fide compromise. It was not reached on legal advice, but it was, as the Learned Deputy District Judge correctly identified, reached with assistance from a regulated claims management company. I consider the terms of the compromise to be fair and reasonable. The Respondent applied DISP App 3 in a fair and proper way in my view. DISP App 3 was a scheme set up by the FCA to seek to achieve broadly fair results across a range of cases. The mere fact that the Commission and Profit Share was “higher than usual” (my words) did not render that approach unfair or unapplicable. The Respondent did not take unfair advantage of the Appellant. I accept that the Respondent's case would be stronger if it had openly and squarely said at the time of the Offer of Redress Letter what the actual level of the Commission and Profit Share was. However, the Appellant did have the benefit of advice and assistance and nothing that the Respondent did, with respect to the settlement, was "sharp" or discreditable. … . [T]here was, in my view, an objectively clear compromise which either she, as a lay person, did understand, or ought reasonably to have understood at the time.”