The Court of Appeal has decisively concluded that solicitors seeking to reopen payment protection insurance (PPI) claims have no grounds to proceed, closing a significant chapter in the PPI mis-selling saga.
In recent proceedings, the Court of Appeal considered second appeals in two cases involving allegations of undersettled payment protection insurance (PPI) claims. The court described these cases as typical of many related to PPI mis-selling, where claimants paid premiums without full knowledge that most funds went towards commission and profits for introducers or sellers of the insurance policies.
In both cases, claimants attempted to reclaim all payments through claims management companies, but Santander Cards UK and Skipton Building Society, the defendants, offered smaller settlements. These settlements adhered to the guidance from the Financial Conduct Authority (FCA) and were accepted by the claimants. Subsequently, the claimants sought further compensation under sections 140A and 140B of the Consumer Credit Act 1974, arguing that the initial settlements did not cover their full entitlements.
However, the defendants maintained that settlements were reached fairly, preventing further claims. Both the initial judgment and the first appeal upheld this position, a decision that the Court of Appeal echoed. Lord Justice Stuart-Smith highlighted that the FCA’s scheme was a well-considered alternative dispute resolution process, distinct from traditional, more exhaustive litigation procedures. He noted that it provided a defined but flexible resolution mechanism and should not be compared directly to litigation in terms of detail or cost.
In the specific case involving Skipton, the claimant, Jason Harrop, received explicit information before acceptance of the settlement, which was deemed fair and reasonable. The court determined that the absence of direct legal advice in settling the case, being handled by a claims management company instead of solicitors, was not crucial in deciding the fairness of the settlement.
Meanwhile, Harcus Parker, another firm involved in these claims, is preparing for group litigation on behalf of approximately six million claimants who have yet to receive full compensation. This initiative will seek a group litigation order, backed financially by Katch Investment Group and after-the-event insurance for subsequent proceedings. Successful claimants could expect a deduction of 35% from their damages for fees and disbursements.
In a parallel development, the FCA has deferred the deadline for motor finance providers to respond to discretionary commission arrangement complaints, pushing the deadline to December 2025. This delay accompanies an ongoing judicial review initiated by Barclays Partner Finance over a Financial Ombudsman Service decision. These developments affect a significant number of claimants in car finance arrangements predating January 2021, potentially subject to overpayment due to undisclosed commission practices.
The Court of Appeal’s ruling underscores the finality of settlements reached under FCA guidance for PPI claims, highlighting the boundaries between alternative dispute mechanisms and traditional litigation. Meanwhile, ongoing actions and regulatory reviews continue to shape the financial landscape for numerous affected consumers.
