If you have been mis-sold a financial product, any delay in seeking legal advice may jeopardise your right to compensation – but what if facts on which you might found your case have been deliberately concealed from you? The Supreme Court answered that question in a case of crucial importance to consumer rights.
A woman borrowed £20,787 from a bank. Of that sum, £3,834 related to a payment protection insurance (PPI) policy which the bank arranged on her behalf. Unbeknown to her, over 95 per cent of the latter sum was paid to the bank as commission on the sale of the policy. The insurer received £182.
More than 12 years later, after taking legal advice, the woman launched proceedings against the bank, seeking to recover sums that she had paid in respect of the PPI policy, plus interest. The bank's failure to disclose the commission, she contended, rendered the relationship between them unfair within the meaning of Section 140A of the Consumer Credit Act 1974.
The bank defended her claim on the basis that it had been brought far outside the six-year limitation period which applies to such cases under the Limitation Act 1980. In upholding her claim, however, a judge found that the existence of the commission had been deliberately concealed from her. That decision was subsequently upheld by the Court of Appeal.
Ruling on the bank's challenge to that outcome, the Supreme Court noted that it had not been established that the bank knew or intended that its failure to disclose the commission would render the relationship with the woman unfair. It could not be said, therefore, that the bank had deliberately committed a breach of duty. To displace the limitation period, it was insufficient to show that the bank had acted recklessly in turning a blind eye to the risk that the relationship would be unfair.
In dismissing the appeal, however, the Court found that the deliberate concealment of the commission, within the meaning of Section 32(1)(b) of the 1980 Act, meant that the limitation period did not start to run until the woman discovered its existence on taking legal advice. Her claim, which was issued promptly thereafter, was therefore not lodged out of time.
The Court noted that a fact is concealed if it has been kept secret, either by taking active steps to hide it or by failing to disclose it. The woman did not have to show that the bank was under a legal, moral or social duty to disclose the commission. All that she was required to establish was that the bank deliberately ensured that she did not know about the commission and so could not bring proceedings within the limitation period.
The woman could not, the Court observed, have pursued her claim without knowing about the commission and its amount. The bank deliberately concealed its existence by consciously deciding not to tell her about it. There was no suggestion that she could, with reasonable diligence, have found out about it any earlier than she did. The requirements of Section 32(1)(b) having been met, the start of the limitation period was postponed until the date on which she obtained actual knowledge of the commission.
