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Fri 10th September, 2010
News
Lawcomm Team Achieve PPI Success |
6th July 2009 |
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Lawcomm Case Update
We are pleased to report further success in respect of unenforceability and mis-sold payment protection insurance (“PPI”) litigation.
Case Summary – Mrs G
Background
Mrs G, a retired teacher on incapacity benefit, foster parent and recent divorcee was struggling financially. She borrowed £10,000.00 from a well-known ‘High Street’ bank and was sold-PPI in addition to the loan. When she fell behind on her repayments the lender issued court proceedings. Mrs G instructed Lawcomm Solicitors to audit her loan agreement for enforceability, to investigate PPI mis-selling and to defend her in court proceedings.
We discovered the following:
Legal Analysis
A s77 Consumer Credit Act 1974 (“CCA”) request for a true copy of the loan agreement revealed that the agreement had not been signed by either the lender or the borrower.
The PPI had been sold as a mandatory element of the agreement. Accordingly, the PPI was a charge for credit rather than a credit within the meaning of Regulation 4 (c) of the Consumer Credit (Total Charge for Credit) Regulations.
In accordance with section 61 (1) (a) of the CCA the Agreement was not properly executed as it failed to describe the PPI as a charge for credit as prescribed under column 2 of Schedule 6 of the Consumer Credit (Agreements) Regulations.
In addition, the PPI was mis-sold as the Lender:
1 failed to advise Mrs G that the PPI was optional;
2 failed to advise Mrs G that the PPI did not have to be taken out at the same time as the Agreement or at all;
3 failed to advise Mrs G that the PPI could be purchased elsewhere; and
4 failed to advise Mrs G that the PPI was not suitable considering her circumstances (as specified above) rendering the PPI worthless to her.
Lawcomm argued that the lender’s actions, by failing to comply with the requirements of the CCA and mis-selling the PPI, constituted an unfair relationship pursuant to Section 140 A-B of the CCA (as amended by section 21 of the Consumer Credit Act 2006).
Result
The Lender initially defended its position via a ‘magic circle’ firm of solicitors but prior to trial admitted that the PPI had been mis-sold. The lender attempted to set off the amount they would refund in respect of the PPI against the outstanding debt. We successfully argued that the lender should not set-off the refund against a debt that was irredeemably unenforceable. In addition, our client was contacted directly by the lender in order to settle directly for a lower amount. We argued harassment due to our client’s increased stress and vulnerability and received an apology from the lender for contacting our client direct.
The lender’s solicitors forcefully argued against unenforceability but eventually conceded and offered:
- To pay Mrs G the sum of £2999.34 in respect of the mis-sold PPI
- To write off the balance of the outstanding debt and not pursue the debt
- To pay Mrs G’s costs
- To remove any adverse entries at the Credit Reference Agencies
Settlement was achieved within five months from receipt of instructions.
Mrs G was very pleased with the result. The result has assisted her in clearing mortgage arrears and to end repossession proceedings. The payment will allow her to get back on her feet financially.
Lawcomm Solicitors continue to be one of only a few firms nationally to have the expertise and experience to have successfully concluded contested litigation arising out of the Consumer Credit Act 1974-2006.
Should you require any further information, please do not hesitate to contact Mr Bill Dhariwal, Mr Oliver Turner or Mr Jojar Singh by telephone on (01489) 864 100 or by e-mail on fcrt@lawcomm.co.uk.
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