Banking giant, Lloyds TSB, has won a significant court case, which has already been dubbed ‘landmark’ by finance and legal professionals alike.
It is thought that the victory will put an end to a number of ways consumers can challenge the enforceability of debts that relate to Payment Protection Insurance (PPI).
As reported in www.credittoday.co.uk, a judge decided to hear the PPI case in the High Court, in order to set a binding judgement for the county courts, where most PPI cases are head.
He dismissed four separate claims brought against Black Horse Finance, a subsidiary of Lloyds, by consumer David Speak, who had defaulted on a PPI policy contained in a loan of £5,000.
Speak claimed that Black Horse mis-sold the PPI as compulsory, had misrepresented the product at point of sale, was in breach of insurance conduct of business rules, and had breached the 1974 Consumer Credit Act by creating “an unfair relationship between lender and borrower”.
Judge Waksman ruled against all these claims, deciding that the testimony of the Black Horse PPI saleswoman was more consistent than the testimony provided by Speak.
This landmark ruling means that future claims concerning PPI can only be brought against banks on grounds of misrepresentation at an individual point of sale.
David Bowden, senior litigation lawyer at Lloyds TSB, speaking with Credit Today, said: “Not only have we won but we have set a precedent in the high court that county court judges are going to have to follow.”
PPI has been a controversial topic in the last couple of years, with tales of mis-selling rife and over 13,500 consumer complaints lodged with the Financial Ombudsman Service between April and June of this year alone. 81% of these complaints have been upheld and a number of banks have been landed with huge FSA fines for PPI mis-selling.
In most PPI cases banks have tried to settle with the customers before the case is brought to court, but Bowden said the Lloyds “dug their heels in on this”.
Following the decision Lloyds announced that it would no longer be selling PPI.
Industry experts have speculated that other banks will soon follow Lloyds TSB in ceasing PPI sales alongside loans and credit cards, although it’s expected that it will remain in place for mortgages.
