(Decision was given on appeal from the District Court)

The borrowers took out a loan for £46,000 and a PPI policy costing £11,500. They later refinanced this package and borrowed £60,000, cancelling the original PPI policy and taking out a new one at a cost of £10,200. They then refinanced again, cancelling the PPI altogether. The total cost of the PPI to the borrowers was £10,529.70. The bank sold the PPI as agent for the actual insurer and earned commission of £8,887.49 which was 87 percent of the premium. It was common ground between the parties that the bank did not disclose the fact, or the amount, of this commission to the borrowers. The court determined that there was no unfair relationship between the parties. It commented on the wide discretion granted to the courts by s.140A of the CCA, saying that "save where clear issues of principle are involved, a decision as to unfair relationship in one particular case based on one particular set of facts is unlikely to be of any real assistance in another." The fact that the features of the PPI were clearly explained, known of, and freely accepted by the borrowers was a relevant factor to take into account when weighing up whether there was an unfair relationship.

Harrison v Black Horse

Mercantile Court, Queen's Bench Division

HHJ Waksman QC

1 December 2010