A decision by a county court judge could mean thousands of borrowers being able to renege on their debts. Judge Jacqueline Smart at South Shields county court has decided that the MBNA credit card company cannot demand the repayment of a customer’s debt. It tried to force Mrs Lynne Thorius to repay the £8,000 she owed on her card. But the Judge decided there had been an unfair relationship between Mrs Thorius and MBNA because of the way she had been sold payment protection insurance. ‘Massive ramifications’ Mrs Thorius’s case was pursued on her behalf by a claims management firm Cartel Client Review, based in Manchester, and the law firm Consumer Credit Litigation Solicitors. Carl Wright of Cartel Client Review said the court decision was a landmark judgement. “This will have massive ramifications for consumers up and down the country,” he said.
The credit card in question was branded with the logo of Sunderland football club and was sold to Mrs Thorius in the club’s shop in 2002. The PPI policy was strongly recommended by MBNA to her at the same time, to pay off her account if she fell ill or was made redundant. But, critically, she had not been told that MBNA would be receiving regular commission payments from the insurance provider ITT London & Edinburgh, a subsidiary of the Aviva insurance group. Judge Smart agreed with the argument of Mrs Thorius’s barrister, Paul Brant, that this “secret” commission meant the credit card deal was unfair and therefore in breach of the Consumer Credit Act. This point could potentially undermine many other agreements where PPI has been sold by the lender alongside a loan. These include car finance deals, other personal loans and even mortgages.
“This practice is believed to be widespread and formed part of the Competition Commission’s decision to prohibit the co-sale of PPI with credit in its report published on 29/1/09,” her solicitors noted. “This point is likely to affect many thousands of individuals within England and Wales,” they added.
“We have been using this argument for some time but lenders have been settling outside the courts to avoid publicity,” said Mr Wright.