In Stuart Goodman and Margaret Goodman v Central Capital Limited [2012] EWHC B8 (Mercantile), the court considered a claim brought by the claimants (the Goodmans) in respect of their purchase of a Payment Protection Insurance (PPI) policy through Central Capital Limited (CCL) in relation to a loan agreement.

The Goodmans brought a claim in the High Court for damages under section 150 of the Financial Services and Markets Act 2000 on the basis that CCL had breached certain provisions of the Financial Services Authority’s Insurance: Conduct of Business Sourcebook (ICOB).

The Goodman’s first application was that CCL had breached ICOB 2.2.3R in failing to advise them that PPI was optional. CCL submitted that the court should objectively consider contemporaneous evidence such as transcripts of telephone calls and the loan documentation, rather than the "subjective rewriting of history" by the claimants. The contemporaneous evidence showed that CCL had conveyed to the Goodmans that PPI was optional. Judge Simon Brown QC held that where the witness statements were different to the contemporaneous evidence, the court would favour the latter.

The second application was that in breach of ICOB 4.3, CCL did not take reasonable steps to ensure that the PPI policy was suitable for the claimants’ demands and needs. The Goodmans alleged inter alia that CCL should have recommended wider coverage that protected against loss of both their incomes rather than just the income of Mr Goodman.

During the trial, the Goodmans pleaded that they would have bought PPI coverage for both their incomes had it been offered to them. The judge found them to be untruthful because this directly contradicted their witness statements, in which they claimed that they would not have purchased PPI had they known it was optional. The judge agreed that PPI was needed only in respect of Mr Goodman's income because Mrs Goodman did not earn enough to service the loan. Judgment was entered for CCL and the Goodmans were ordered to pay costs on an indemnity basis.

It is clear from this decision that where there is evidence that customers received a full explanation about the policy from the salesman and knew what  there were signing up to, there is no recourse from the courts.