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HARRISON & ANOR v BLACK HORSE LTD

The failure of lenders to tell borrowers that they had received commission for selling them payment protection insurance did not amount to unfairness in the relationship between lender and borrower for the purposes of the Consumer Credit Act 1974 s.140A and s.140B. The Insurance Conduct of Business Rules did not impose a duty to disclose the receipt of commission and the high rates of such commission did not generate such a duty.

17 October 2011

The appellants (H) appealed against a decision ((2010) EWHC 3152 (QB), (2011) Lloyd’s Rep IR 455) dismissing their claim under the Consumer Credit Act 1974 s.140A and s.140B in relation to payment protection insurance (PPI) they were sold by the respondent lender (B). H were sold PPI in 2006 at the same time as they negotiated a loan from B. B earned a commission from the insurers on the sale of the PPI, which represented 87 per cent of the premium paid by H. B did not tell H about the commission. H’s action, challenging B’s compliance with the Insurance Conduct of Business (ICOB) Rules, was dismissed by the High Court. H argued that, in the absence of an explanation, the commission was so egregious that it gave rise to a conflict of interest which it was B’s duty to disclose. They further argued that only disclosure could give the borrower the opportunity to decide whether they wished to purchase a product in circumstances where the lender derived such a benefit from the pu...

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