Supreme Court Clarifies Limitation and Unfair Relationships in PPI Claims

Background

Ms Smith and Mr Burrell alleged that RBS received significant undisclosed commissions from their PPI payments. They argued that this non-disclosure rendered the relationship unfair under section 140A of the 1974 Act. Their PPI agreements ended in 2006 and 2008, but their credit agreements continued until 2015 and 2019.

Two issues arose. First, whether their claims were time-barred under section 9 of the Limitation Act 1980. Second, whether the relationship remained unfair after the final PPI payments.

Proceedings

Smith and Burrell brought separate claims in 2019. District judges found in their favour, and County Court judges upheld those decisions. RBS appealed, and the Court of Appeal held that the claims were time barred.

The Court of Appeal reasoned that section 9 imposes a 6-year limitation period from the date the cause of action accrues. It held that the cause of action accrued when the final PPI payments were made. The claimants appealed to the Supreme Court.

Applicable Law

Section 140A of the Consumer Credit Act 1974 empowers courts to determine whether a credit relationship is unfair. Unfairness may arise from the terms of the agreement, the creditor’s conduct, or anything the creditor did or failed to do. Section 140B allows courts to make wide-ranging remedial orders.

Courts can assess unfairness at the end of the relationship. The court may reverse financial consequences suffered by the debtor.

Judgment

Lord Leggatt delivered the unanimous judgment. RBS did not dispute that non-disclosure of commission rendered the relationship unfair, consistent with Plevin v Paragon Finance [2014] UKSC 61. The Supreme Court therefore focused on limitation and the persistence of unfairness.

Limitation

RBS argued that the cause of action accrued when the final PPI payments were made in 2006 and 2008. It submitted that section 9 of the 1980 Act expired the claims 6 years after those dates. The Supreme Court rejected this argument.

Lord Leggatt held that a cause of action cannot accrue until the credit relationship ends. A finding of unfairness cannot be made while the relationship persists. Since the credit agreements ended in 2015 and 2019, the claims were within the limitation period.

Persistence of Unfairness

RBS argued that even if limitation had not expired, the relationship ceased to be unfair once it made the final PPI payments. The Court of Appeal held that unfairness does not necessarily persist for the duration of the agreement. The Supreme Court agreed with the legal principle but disagreed with its application.

Lord Leggatt held that the relationship remained unfair because RBS neither repaid the PPI sums nor disclosed the commission. The unfairness continued until the credit agreements ended. The appeal was therefore allowed.

Commentary

This decision confirms that limitation runs from the end of the credit relationship, not from the date of the final PPI payment. Creditors cannot rely on section 9 to bar claims arising during the relationship. However, Lord Hodge cautioned against exposing creditors to stale claims and emphasised judicial discretion.

Courts can refuse remedies where debtors delay unreasonably. Whether this judgment will prompt further claims remains uncertain. The decision provides clarity but leaves scope for future judicial interpretation.