Chester 01244 405555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

Shrewsbury 01743 443 043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Airport City, Manchester 0844 800 8346

Office 129
Manchester Business Park
3000 Aviator Way
Manchester M22 5TG

Send us a message
Our Offices

The Supreme Court gives guidance on what is and isn’t fair

5th December, 2014

Remember your parents telling you as a child that life wasn’t fair?

The Supreme Court has recently given some guidance on what is and isn’t fair, and the consequences of unfair behaviour in consumer credit transactions.

Section 140A of the Consumer Credit Act 1974 (which was added by the Consumer Credit Act 2006) allows the court to review, vary or cancel any credit or loan agreement which is “unfair to the debtor”. This is a much wider discretion than the old “extortionate credit bargains” under the original Consumer Credit Act, and covers the loan being unfair because of:

• the terms of the agreement (or any related agreement);
• the way the lender has behaved in enforcing its rights; or
• anything else done (or not done) by or on behalf of the lender.

In the recent case of Plevin v Paragon Personal Finance Limited ([2014] UKSC 61), Mrs Plevin had borrowed money from Paragon Personal Finance. The loan, and an associated payment protection insurance product (PPI), were sold to Mrs Plevin by an independent broker, LLP Processing (UK) Limited. The loan was for £34,000 and the premium for the PPI was £5,780 which was added on to the loan. Out of the PPI premium, nearly 72% (or £4,150) went to Paragon and LLP as commission. Mrs Plevin’s case hinged on her contention that she was not told about the size of the commission payments and, if she had been, she was unlikely to have entered into the loan.

The court was asked whether that non-disclosure made Mrs Plevin’s relationship with Paragon unfair. The court suggested that sometimes it would be fair not to disclose commission payments and in some cases it would be unfair. In this instance (and without determining at what point fair becomes unfair), the court firmly decided that the size of the hidden commission payments was a long way beyond the tipping point and accordingly that Paragon’s relationship with Mrs Plevin was unfair. The case has been sent back to the High Court for a decision on the appropriate remedy for Mrs Plevin.

However, in a helpful judgment for lenders, the court clarified the meaning of “on behalf of”. Section 140A is not just concerned with anything done by the lender, but also anything done on the lender’s behalf – which of course could be well outside the lender’s control. The court made it clear that this only covers agency arrangements and in this case, LLP was acting as Mrs Plevin’s agent, and not for Paragon.

For more information please contact Hugh Strickland on 01743 294120 or email [email protected]

You might also be interested in...

Ethics Guidance – Transparency in Price and Service

16th November, 2018

It is reported that a quarter of all complaints dealt with by the Legal Ombudsman revolve around costs therefore to avoid complaints and confusion, it is important to be clear from the outset. The new Transparency Rules (which the SRA have now confirmed will come into effect on 6 December 2018) require that accurate and relevant information is... Read More »

Aaron & Partners Increases Recommendations in Leading Industry Guide, The Legal 500

5th November, 2018

Aaron & Partners LLP has once again seen improved rankings in The Legal 500 – a comprehensive guide... Read More »

Mental Health and Stress in the Workplace – 3/3

10th October, 2018

In the lead up to World Mental Health Day on 10 October 2018, we have been posting a series of short articles discussing mental health and stress in the workplace. In this final article, we will be providing tips, to employers and employees, for managing stress and dealing with mental ill health in the workplace. Click here to... Read More »

Contact Us