Credit card PPI ruled unfair

South Shields county court’s Judge Jacqueline Smart has ruled that payment protection insurance (PPI) policies could be invalid if sellers do not reveal they are earning commission, the Times and Guardian report.

She ruled a credit card holder, Lynne Thorius, was entitled to have her PPI payments refunded because MBNA did not reveal that it would be earning commission from the insurance provider when it sold her the policy.

The FT said the ruling suggests that even if a PPI policy has not been mis-sold, failure to spell out the commission received from the sale of policies could make the policy invalid.

Unfair relationship

The Guardian said the judge decided that an "unfair relationship" had arisen between and MBNA. It is thought to be one of the first judgments using the new "unfair relationships" test within Section 140 of the Consumer Credit Act 1974, and was believed to be the first instance of an unfair relationship having been established.

The claims management firm that took on Thorius's case, Cartel Client said the decision could open the floodgates "for millions of other people" and meant that anyone with PPI on a credit card or loan would have grounds for a claim.

Thorius, a cleaner on a low income, was represented by barrister Paul Brant of Oriel Chambers. She claimed she was "pestered" by a sales agent to sign up for the card and had declined the offer of PPI, "but they applied it to my account anyway".

Phone call denied

The court heard that MBNA alleged that Thorius agreed in a phone call to take out the insurance, something she denied.

MBNA said: "Cases decided in the county court are decided on their own merits and do not form binding precedents."