We first make you aware, we are unsure that Mr P’s successful legal action against the Trustee Savings Bank (TSB) was used in the PPi Super Complaint raised for the action to be taken by the Office of Fair Trading (OFT), on the mis-selling of PPi products.
His successful action, did set UK CASE LAW.
A significant number of PPi claims companies have used and quoted his case, in court; where the financial institutions have refused to pay the claim.
As Mr P case was over 26 years ago, there may be some errors.
Mr P apologises to anyone who has received any unwanted letters, phone calls, and any other communications from PPi claim companies.
Mr P is not responsible for any actions by these companies, who are acting on their own and are in no way associated with him.
Irrespective of the tactics these PPi claims companies and individuals used to action the PPI claim on behalf of others due to the mis-selling of PPi, the action against financial institutions has provided many benefits. Some of, which were, showing institutions they have to act responsibly and within the law.
There are unfortunately some companies and people who believe the law does not apply to them. When found, they will be highlighted on this website. They should take note.
How was PPi mis-sold, leading to the wide-spread successful claims
All the details of the mis-selling details are contained in Mr P’s claim.
- On most policies, the cost of the insurance was nearly as much as the benefit that could be received, due to time limits of insurance payment cover.
- Most agreements where PPi insurance was included, the PPi insurance was sold as a separate product, but could not exist without the product it was provided to protect. Most product (agreements / financial transactions) that were entered into are covered by the Consumer Credit Act 1974 (CCA)
The cost of the PPi insurance is added to the financial transaction it is being used for to protect, with the cost of the PPi being added to the financial transaction, it becomes part of it.
As the agreement included the cost of the PPi, it became one agreement and not two. All details of the PPi must be included in the agreement; by not including it, the agreement was and is not valid.
There were three areas of action
Possible solutions; luckily decided against
(Beneficial for the financial institutions, no penalties for mis-selling, more work for the consumer,
less money received and a lot fewer consumers could or would take action.
It could have been decided to leave everything as is. The agreements would be classed as valid and all the terms would be enforceable.
- As the agreements did not contain all the terms and conditions, namely the PPi details, the agreement according to the CCA, the agreement was not valid or enforceable. The agreement is only enforceable by a court order, this would result in a problem. To challenge any agreement would need the person concerned to take the financial institution to court; as was the case for Mr P. There would also be a problem for people whose agreements had ended. It would be unlikely that any court would take action against a completed agreement.
This results in a dilemma, it would be for a judge to decide what to do about the agreement. A judge had a few options, he could.
- Rule the whole agreement is not valid and cancel it. The Judge could also order that all outstanding sums are written off.
This would have been highly unlikely.
- Rule the whole agreement is not valid, and have it amended. The amendment could be the remaining PPi payments be reduced, but the outstanding sum owed to remain. The Judge could also order the financial institution to provide recompense, but this would have been unlikely and would have been argued by their lawyers. The previously paid PPi costs would not be refunded or reduced. The problem with this scenario would have been, there would have been no action taken against the financial institution for mis-selling.
The current situation
(not beneficial for the financial institutions, financial penalties for mis-selling and better for the consumer)
As most financial agreements which included PPi in them were mis-sold, The current situation is that all financial institution have to refund any and all PPi charges paid.
The financial institutions had 2 choices, which are known about; there are likely to have been more
- Risk court action, including class actions, where it could be ruled that as the agreements were invalid, they were void and all sums paid and due were to be written off. Due to the number of cases that would be brought, the legal cost and the risk involved, this was not a tenable option. The costs to each financial institution would have been great, more than what has been paid out for PPi.
- The situation we have now, where all PPi payments have or are being refunded. Refunding the PPi charges removes the PPi element from the agreements, making them valid.
Mr P’s Case against the then Trustee Savings Bank (TSB)
This in no way relates to the TSB of today. Which was created from a split of TSB from Lloyds Bank PLC
We will not go into the details of Mr P’s transaction, but he applied for and was successful in applying for a loan. This loan came with PPi
Mr P had need of the PPi during his loan repayment period, however, unbeknown to Mr P there was a time limit of 6 months or 6 payments that the PPi would pay for.
Once the 6 payments had been made, TSB without a court order took a payment from his current account, causing him to go overdrawn. The law is quite clear you cannot enforce a debt without a court order, even if the terms of the obtained credit states to the contrary.
Mr P spoke to TSB (the then Branch Manager) and stated he was never told of the 6-month limit, and that the protection should continue. The Branch Manager informed Mr P of the booklet he was given at the time of signing. Mr P stated that he was never given a booklet or had ever been sent one. The branch manager then said he would arrange for Mr P to be sent one, but still said that MR P was liable and that they could amend the agreement to cover a longer period, so reduce the monthly payments Mr P had to pay. He stated Mr P would urgently have to settle the overdraft.
Mr P did finally receive a PPi booklet with the clause which stated the 6 month limited, the leaflet also came with a letter, part of the letter stated:
We apologise if we forgot to give you a booklet when you signed for the loan or subsequent. Please find enclosed the booklet you should have received. The booklet, however, was not correct as it was drafted and date subsequent to the date Mr P took out the loan.The only solution open to Mr P was to take legal action against TSB. Mr P engaged his solicitor, to issue proceedings.
TSB was also informed that as proceedings had commenced all monthly payments due by Mr P had to stop until a decision was made by the court. A legal opinion made at the time was a reference to s65 of the CCA, which states:
Consequences of improper execution.
(1) An improperly-executed regulated agreement is enforceable against the debtor or hirer
on an order of the court only.
(2) A retaking of goods or land to which a regulated agreement relates is an enforcement
of the agreement
With a breach of s75, there is enforcement action by way of s25
Section 25(2A)(e) of the CCA states:
engaged in business practices appearing to the OFT to be deceitful or oppressive or otherwise unfair or improper (whether unlawful or not).
Section 25(2B) of the CCA states:
For the purposes of subsection (2A)(e), the business practices which the OFT may consider to be deceitful or oppressive or otherwise unfair or improper include practices in the carrying on of a consumer credit business that appear to the OFT to involve irresponsible lending.
TSB was informed at the time and the fact that they could lose their Consumer Credit Licence. Without this licence, they would not have been able to function, as they would not be able to lend money, so no loans or mortgages, etc..
There will soon be another PPi type scandal concerning Financial Institutions again, Builders, NHBC, Housing develpment Management Companies and the Government.
We will keep the site update, please see our other sections.
Important Note, if you use a Credit Card, or obtain any form of credit over £100, in a single transaction
Most should and will be familiar with s75, of the Consumer Credit Act, if not you should.
When paying for anything over £100 using a Credit Card, or being supplied with any credit, your Credit Card or Credit provider is jointly and severally liable, for any breach of contract or for any false or unsubstantiated statements from the store/retailer, or Credit supplier.