The claimants brought separate claims against Skipton Building Society and Santander Cards UK Limited, alleging that their respective relationships under credit agreements held with each firm were unfair on the basis that they resulted from undisclosed commission arrangements in respect of PPI policies.
When the claimants sought repayment of the PPI sums, the respondents offered a smaller sum calculated by reference to FCA rules and guidance set out in DISP, on the basis that acceptance of the offer settled the claimants’ claims. After accepting their respective offers, the claimants both brought further claims under sections 140A and 140B of the Consumer Credit Act 1974. They argued that there had been no valid consideration for a settlement, because the payments had been offered pursuant to DISP. In both cases, the judge hearing the claims concluded that they had been compromised. The claimants were both unsuccessful on first appeal, but after obtaining permission to appeal further, and the Court of Appeal heard both cases together in May 2024.
The claimants appealed on similar grounds, including that there was no consideration for the compromise, because Skipton and Santander were subject to a redress duty under DISP, so redress payment could not constitute valid consideration, as nothing further was offered beyond a payment the firms were required to make. They also argued that the firms accepted liability to pay the respective monies and therefore could not rely on such payment as valid consideration.
The firms opposed the appeal on the basis that DISP did not operate to prevent an offer from being made to resolve a claim in full and final settlement. They argued that in accepting payment, the claimants had received consideration, because they benefitted from a contractual entitlement to payment of the sum, and also that there was no admission of liability.
The Court of Appeal unanimously dismissed the claimants’ appeals, and highlighted the following points:
- DISP does not require a firm to pay a specific sum, rather it provides a process which might lead to a redress offer if that route is considered appropriate by the firm in question. There is nothing in DISP or elsewhere which means that a binding settlement of present or future claims cannot be proposed when a firm makes a DISP 1.4.1R offer.
- DISP contains a process intended to generate a fair outcome via an ADR method which is designed to marry best practice with the objective of reducing pressure on the FOS, and the likelihood of litigation. Even in cases where a respondent decided to adopt the default positions under the DISP process, this would not give rise to an obligation to pay a particular sum as a matter of course.
- Although the firms had both used the word “due” in their redress letters, this simply constituted a reference to the relevant sum being consistent with FCA provisions. It did not create a pre-existing obligation to pay.