Stenio Aladim succeeds in overcoming transitional provision arguments in consumer credit claim

Stenio Aladim was successful in representing a claimant concerning a payment protection insurance (“PPI”) claim brought against a well-known financial institution. 

The claimant had entered into a credit card agreement in 1999 and had a PPI policy added to his contract. Following the Supreme Court decision in Plevin v Paragon Personal Finance [2014] UKSC 61 concerning hidden PPI commissions paid to financial institutions, the claimant instructed solicitors to act on his behalf in bringing a claim against the defendant for a full refund of the premiums paid under the unfair relationship provisions of the Consumer Credit Act 1974 (“CCA”).

In defending the claimant’s claim to trial the defendant alleged that the claimant’s policy of PPI was cancelled in 2005 and therefore the claimant had no cause of action pursuant to the unfair relationship provisions of the CCA. The defendant submitted that the unfair relationship provisions of the CCA only came into force on 6 April 2007 and did not apply to agreements entered before that date, unless the agreement was still in force as of 6 April 2008, in accordance with the transitional provisions contained in Schedule 3, paragraph 14 of the Consumer Credit Act 2006. In making these submissions the defendant relied upon the recent Court of Appeal decision in Smith v RBS [2021] EWCA Civ 1832.

Stenio submitted that the relevant date for the purposes of the issue raised by the defendant to be considered under s.140A of the CCA was when the alleged unfairness in the relation between the claimant and the defendant ceased to exist. Stenio submitted that it was the defendant who was asserting that unfairness ceased at the point in time when the PPI policy was cancelled, yet it had failed to provide any evidence to confirm the date on which the balance owing (including sums relating to the PPI policy) on the claimant’s credit card had been reduced to zero or written off and with it any economic effect arising as a result of the PPI. Further, Stenio submitted that the defendant’s decision to provide partial redress in 2018 reflecting PPI commission payments above the FCA’s “tipping point” meant it was a reasonable inference to draw, on the balance of probabilities, that the balance owing was reduced to zero or was written off after 6 April 2008. 

Finding in favour of the claimant the District Judge concluded that the court was in no difficulty in applying the unfair relationship provisions of the CCA to the claimant’s claim, given the previous position adopted by the defendant in granting a partial redress payment to the claimant. The court concluded that the defendant was unable to simply change its view now when it was not favourable to its own interests to adopt the position that was previously held by it.

Stenio also successfully dealt with a secondary point concerning limitation whereby he was able to persuade the court to apply section 32 of the Limitation Act 1980 to postpone the commencement of the relevant limitation period in relation to the claimants claim.

As a result of Stenio’s submissions, the relationship between the claimant and the defendant was declared unfair and relief was awarded to the claimant reflecting the full amount of the PPI premiums paid by the claimant, plus discretionary interest at 1%.