James Martin-Smith v Welcome Finance Limited

December 19, 2019

HHJ Sephton QC

Manchester County Court



The Plevin litigation field is generating a number of decisions across county courts at the moment. In assessing relief for undisclosed commission claims, courts are being asked to choose between the approach adopted by HHJ Pearce in Doran v Paragon (repayment of all PPI premium plus interest), and the approach advocated by the Financial Conduct Authority within PS 17/39 (repayment of commission and profit share in excess of 50% plus interest).

In a further development in the latest saga involving Plevin litigation, St John’s Buildings barrister Steven McGarry appeared on behalf of the claimant in his claim against Welcome Finance Limited. Mr McGarry was instructed by financial mis-selling specialists APJ Solicitors.

The Claimant had obtained loans with PPI policies from the defendant in May and December 2007 (the later loan consolidating the earlier loan). The undisclosed commissions and profit share on the PPI policies were in excess of 85%.

Although the defendant originally disputed the claim to an unfair relationship, this aspect was conceded on the morning of trial.

The defendant argued that the undisclosed commission claim in relation to the first loan was time barred as the agreement was “completed” in December 2007, when the consolidation took place. However, HHJ Sephton QC remained unpersuaded by the limitation argument and determined that a plain reading of S.140A of the CCA 1974 allowed for claims relating to refinanced agreements, so long as the overall relationship remained alive within the limitation period (as was the case here, given that part of the consolidated debt was still owed).

A large part of the trial was concerned with the question of the level of relief.

On this issue the court was swayed in part by the evidence of the claimant who indicated that the commission level was “frighteningly high” and would have made him question the transaction had it been disclosed.

HHJ Sephton QC also considered it relevant that the claimant had been told that purchase of the PPI policies would be viewed favourably by the lender when it came to sanctioning the relevant loans.

Interestingly the defendant also argued that the FCA line should be followed because not to do so would ‘open the floodgates’. HHJ Sephton QC was unpersuaded by the argument with the retort: “Fīat jūstitia ruat cælum” (“Let justice be done though the heavens fall”)”

Ultimately, in the battleground between the FCA approach as set out within PS 17/39 and the Doran v Paragon decision, another significant court decision now comes down heavily in favour of the Doran approach (ie full redress of premium plus interest).