In a landmark decision, the Supreme Court has unanimously ruled that two claims related to the mis-selling of Payment Protection Insurance (PPI) by the Royal Bank of Scotland (RBS) were brought within the legal time frame. This ruling marks a significant victory for consumers seeking justice in PPI-related matters.

The case, Smith and another v Royal Bank of Scotland plc, involved two former credit card-holders who were sold PPI policies by RBS. The crucial factor in these claims was the revelation that the bank had received ‘very large undisclosed’ commissions from the sale of these policies.

Both claims were brought more than 10 years after the PPI policies had ended and the final payment was made. However, they were still within the legal limit of six years after the termination of the credit card agreements with the bank.

David Greene, senior partner of Edwin Coe and former president of the Law Society, described the Supreme Court’s ruling as “very important.” He pointed out that the decision overturned the Court of Appeal’s previous judgment regarding the limitation in consumer credit claims. The Supreme Court’s ruling effectively extended the period within which consumers can bring such claims, potentially by many years.

Initially, a district judge had allowed each of the claims, and both were successful in the subsequent appeal. However, the Court of Appeal, which heard both cases together, dismissed the claims on the grounds that the time limit had expired before the proceedings began in 2019.

In this case, it was said that “well over 50% of the money paid for PPI did not go to the insurer but was retained as commission by the bank.” This fact was not disputed by RBS, and it was acknowledged that the failure to disclose these commissions had made the bank’s relationship with the claimants unfair.

The critical question was when the commission was accrued. The bank argued that it started when each PPI premium payment was made, however, the Supreme Court disagreed with this perspective.

The judgment emphasised the “inequality of knowledge” and how it rendered the relationship between the bank and the customer “unfair for the duration of that relationship.” The claimants were unaware of the commissions, which made it unreasonable to expect them to seek repayment.

The judgment highlighted that the unfairness persisted until the end of the relationship in 2015, given that the claimants were financially worse off due to the undisclosed commissions.

The Supreme Court’s unanimous decision in favour of the claimants sends a strong message that consumer rights in PPI claims should be protected, even if these claims are brought years after the fact. The ruling highlights the importance of disclosure and fairness in financial relationships and extends the scope for justice in consumer credit claims. It represents a significant milestone in the ongoing battle for consumer protection.