Court of Appeal backs RBS and NatWest Group in PPI claims case

Between 1990 and 2010, millions of PPI policies, designed to help consumers repay debt in case of loss of income, were mis-sold to UK citizens.

As of May 2020, banks have repaid £38.3 billion in PPI-related claims, with around 30,000 cases still making their way through the British court system.

In a unanimous decision on Friday, the Court of Appeal ruled that potential claimants had six years from the end of the PPI policy in their credit card agreement in which to make a claim.

In many cases, county courts had previously followed the authority of a 2009 High Court ruling  that suggested a claimant had six years from the end of the credit card agreement itself to bring a PPI-related claim against their bank.

RBS appealed against county court rulings in two cases, arguing that the time limit for bringing claims should relate to date of payments under the PPI policy rather than the end of the credit card agreement itself.

In one of the cases before the Court of Appeal, Karen Smith had paid PPI premiums to RBS between 2000 and 2006.

Smith’s credit agreement with RBS eventually ended in 2015, before she lodged a claim for repayment of the PPI premiums in 2019.

In the second case, Derek Burrell had entered into a credit card agreement with the bank in 1998 and made PPI payments until 2008.

His credit card agreement ended in 2019, the same year that he issued a claim against RBS.

Both claimants had previously received limited compensation through the Financial Conduct Authority-led PPI redress scheme.

County courts had previously ruled in Smith and Burrell’s favour, since both their claims were made within six years of the end of their credit card agreements with RBS.

But in his judgment on Friday, with which the two other Court of Appeal judges agreed, Lord Justice Birss said an unfair credit agreement in which a PPI policy had been mis-sold became fair again once the PPI policy ended.

The Court said Smith’s chance to make a claim against RBS ended in 2012 – six years after her last PPI payment –while Burrell’s ended in 2014.

Reacting to the decision, a NatWest Group spokesperson said: “NatWest Group welcomes the decision of the Court of Appeal, which is likely to reduce the number of stale claims being pursued by claims management companies in the county courts.” 

Joanne Gillies, financial services litigation expert at Pinsent Masons, which acted on Natwest Group’s behalf, said the ruling made it clear “that the primary limitation period for consumer claims arising from unfair relationships starts when the unfairness ends, not when the relationship ends.”

“This is a stark contrast to the position previously adopted in a number of county courts, including in the decisions in Smith and Burrell, which concerned PPI policies ending as far back as 2006.”

“It is helpful that the law is now settled, which should assist the district judges still dealing with thousands of cases raised by claims management companies on behalf of customers who have already received compensation through the FCA-led PPI redress scheme that closed in 2019,” she added.