Plevin Provision – A ‘New’ Mis-sold PPI Rule
Case summary: Plevin refers to a Supreme Court case of Susan Plevin v Paragon Personal Finance 2014. Plevin, a retired college lecturer, was introduced to Paragon by a broker called Loan Line who could arrange refinancing at competitive rates. They assessed the customer’s ‘demands and needs’ for PPI and passed the matter on to the lender Paragon who accepted the business and carried out their money laundering checks which consisted of a telephone conversation with Plevin. However, they did not discuss the suitability of the insurance itself.
The loan was for £34,000 at 7.3% APR over a period of ten years. The loan was set out on the company’s standard form and regulated by the Consumer Credit Act 1974. The PPI was a single premium policy and was to be paid in the first five years of the loan, the cost of which was £5780 – 71.8% of this sum was commission. The insurance was supplied by Norwich Union. The commission was split between the broker (£1870 – 32%), Paragon (£2280 – 39%) and Norwich Union (£1630 – 29%).
Plevin initially claimed that she was mis-sold the PPI on the grounds that it didn’t meet her needs. She also found out that the PPI contained high-levels of commission that was not previously disclosed.
The case was eventually heard by the Supreme Court in June 2014. The grounds were that there was an ‘unfair relationship’ under s.140 of the Consumer Credit Act 1974 between her and the finance company. The case therefore, centred on the non-disclosure by the finance company of the 71.8% commission included within the PPI premium.
Plevin argued that had she known that commission of this level was being paid, she would have questioned if the PPI represented value for money; therefore, she may not have agreed to take out the policy.
In November 2014 the Supreme Court found in her favour, that she was indeed mis-sold the PPI and agreed that the non-disclosure of commission could be regarded as giving rise to an unfair relationship with the lender. The judge said that the commission was beyond a ‘tipping point’ but didn’t explain what the limit or starting point of such a tipping point was.
Susan Plevin was granted full legal costs of £1.3m by the Supreme Court in March 2017