In the case of (1) Mr Abraham Figurasin (2) Mrs Maricel
Palo-Figurasin v Central Capital Ltd and Paragon Personal Finance
Ltd [2014] EWCA Civ 504, the Court of Appeal dismissed Central
Capital Limited's appeal.
Mr and Mrs Figurasin (the Claimants) took out a
loan for £25,000 with Central Capital Limited (the
Defendant). During a telephone conversation, a
representative of the Defendant advised Mrs Figurasin that payment
protection insurance (PPI) was included in the
monthly repayment. However, the loan documentation sent to the
Claimants highlighted that the PPI was financed by an additional
loan.
The Claimants subsequently brought an action against the Defendant
on the grounds that the Insurance Conduct of Business Rules
(ICOB) were breached, including ICOB 2.2.3(1)(R)
which requires a firm to communicate in a "clear, fair and
not misleading" manner.
In the first instance, the Judge upheld the claim that the
Defendant did not make it clear that the PPI was financed by a
further loan. Although, it was accepted that the Claimants did not
read the loan documentation which stated this fact, the Judge held
that the influence of the telephone conversation could not be
underestimated and accepted evidence that Mrs Figurasin knew
nothing about the cost of the PPI.
The Defendant appealed this decision and the matter was referred
to the Court of Appeal. Lord Justice Patten dismissed the appeal on
the grounds that:
i. ICOB 2.2.3(1)(R) must be satisfied whenever a firm
communicates to a customer. The information pack was clear, fair
and not misleading as required by ICOB, however, the telephone
conversation between the Defendant's representative and Mrs
Figurasin did not satisfy ICOB 2.2.3(1)(R). There was an inadequate
explanation on how the PPI would be funded and such omission was
part of the Defendant's marketing strategy;
ii. Although there were cases where a customer's failure
to read the loan documents was fatal to a claim of mis-selling, the
facts of this case are different. In this case, Mrs Figurasin was
given a misleading explanation as to the terms of the PPI which
lead to the Claimants not bothering to read the detail contained in
the loan documentation. The Claimants' failure to read was not
sufficient to remedy the defects in the telephone conversation (as
stated by the first instance Judge); and
iii. ICOB rules are meant to protect consumers from being
misled and are not required to accommodate any irresponsibility by
the consumers.
Lord Justice Vos and Lord Justice Laws agreed with the above and also dismissed the appeal.
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