Greg Standing
In the case of Soulsby and Soulsby vs FirstPlus
Financial Group Plc (1) and Loans.co.uk Limited (2), FirstPlus
advanced money to the claimants under three successive written
credit agreements arranged via a broker. The broker sold the
claimants a payment protection insurance (PPI) policy in relation
to each agreement.
Go deeper with GlobalData
The first credit agreement was entered into in
2002. Subsequently, in July 2003, in order to consolidate the
claimants’ debts, the claimants entered into the second agreement
which incorporated the balance outstanding on the first
agreement.
The balance of the second agreement was
subsequently rolled over into the third agreement in July 2005 in
the same manner. Each of the consolidated agreements included a sum
of credit relating to the funding of the premium for each of the
earlier PPI policies.
The claimants subsequently alleged mis-selling of
the PPI policies as against the second defendant broker and the
defendant.
The claimants sought to re-open all three
agreements, alleging that there was an unfair relationship between
themselves and the defendant in relation to each of the agreements
within the meaning of s140A of the Consumer Credit Act 1974
(CCA).
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSection 140B(1)(a) CCA enables the court to order a
creditor to repay any sum paid by a debtor by virtue of the
agreement or any related agreement.
The claimants alleged that the first and second
credit agreements were related agreements of the third agreement,
as they had been consolidated into it and so were caught by these
provisions.
FirstPlus argued that the first and second
agreements were completed agreements as defined by the CCA, as no
sums were payable under them or would or may become payable. As
they were no longer live agreements, they were therefore excluded
from attack under s140A and the claim in relation to them should be
struck out.
The court agreed with FirstPlus. The first and
second agreements were related agreements which had ceased to have
any operation before s140A CCA came into effect in April 2007.
All the obligations of the claimants under those
agreements had been discharged and if FirstPlus were to attempt to
sue on either agreement, it would have no cause of action.
The agreements were therefore protected from attack
as related agreements under s140B CCA. They might be challengeable
as extortionate credit bargains under sections 137–140 CCA should
that be pleaded, however.
The allegations of unfair relationship in those two
agreements should therefore be struck out.
If a creditor is seeking to
re-open a completed credit agreement it needs to be determined
which regime it should be considered under: the old regime of
extortionate credit bargain or the new one of unfair
relationship.
If the credit agreement was made before
6 April 2007 and ceased to have any operation before the end of the
transitional period (6 April 2008), it will fall to be dealt with
under the old regime, not the unfair relationship
regime.
The author is a partner at
Wragge & Co LLP’s Finance, Insolvency, Recoveries and Sales
team
