Plevin v Paragon Personal Finance Ltd
A lender's failure to disclose that most of a payment protection insurance premium was paid as commission to the lender and broker made the relationship between lender and borrower unfair.
Facts
Mrs Plevin took out a loan from Paragon, arranged through a broker, and was sold a single premium payment protection insurance policy, which was added to the loan. She was not told that about 71.8 percent of the premium was paid as commission to Paragon and the broker. She claimed that the relationship arising out of the credit agreement was unfair, under section 140A of the Consumer Credit Act 1974.
Legal principle
The Supreme Court held that the relationship was unfair. Lord Sumption said that the question of unfairness under section 140A is a broad one, which is not limited to breaches of the regulatory rules, and that the court must consider all the matters which it thinks relevant. The size of the commission, which was undisclosed, was so large that a sufficiently informed borrower would have questioned whether the insurance represented value for money, and the failure to disclose it made the relationship unfair. Paragon was responsible for the broker's failure to disclose. The decision led to a large number of further claims for the mis selling of payment protection insurance.
Related cases on advice, mis-selling and financial regulation
- Bankers Trust International plc v PT Dharmala Sakti Sejahtera [1996] CLC 518
- Crestsign Ltd v National Westminster Bank plc [2014] EWHC 3043 (Ch)
- Customs and Excise Commissioners v Barclays Bank plc [2006] UKHL 28, [2007] 1 AC 181
- Financial Conduct Authority v Macris [2017] UKSC 19, [2017] 1 WLR 1095
- Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
- Johnson v FirstRand Bank Ltd (London Branch) [2025] UKSC 33
- JP Morgan Chase Bank v Springwell Navigation Corp [2010] EWCA Civ 1221
- Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] EWCA Civ 386
Studying banking and finance law? Our tutors help you understand and apply cases like this in essays, problem questions and exams. Request a quote or browse our law notes.
This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
