Figurasin & Anor v Central Capital Ltd

Under the Insurance Conduct of Business Rules, a firm must communicate customer information clearly, fairly and without misleading the customer whenever it communicates it. Compliance is assessed objectively. A later document containing a clear breakdown does not retrospectively cure an earlier misleading telephone explanation, although it may be relevant to causation.

A consumer’s failure to read contractual documents is not automatically fatal. Actual reliance on a misleading explanation, and resulting non-reading, may be taken into account. The rules protect consumers from misleading communications without accommodating every degree of irresponsibility.

Central Capital Limited appealed against a Manchester County Court judgment awarding Mr and Mrs Figurasin £13,000 inclusive of interest for mis-selling payment protection insurance in connection with a secured loan.

The Recorder dismissed the other complaints but found that the telephone explanation failed to disclose that the insurance premium was financed by additional borrowing of £8,750. Central Capital argued that the telephone conversation and subsequent documents formed one process, that the loan agreement clearly disclosed the cost, and that the claimants’ failure to read it defeated or broke causation. The central issue was whether the initial communication breached the relevant rule and whether later documents remedied that breach or broke the chain of causation.

The Court of Appeal unanimously dismissed the appeal.

1. Communication standard. The requirement in the Insurance Conduct of Business Rules that information be communicated clearly, fairly and without misleading the customer applies whenever a firm communicates information. Compliance is assessed objectively.
2. Separate effect of later documents. The telephone explanation was inadequate because it did not explain that the payment protection insurance generated additional borrowing of £8,750. A later loan agreement containing a clear breakdown could not retrospectively remove the breach in the earlier communication. It remained relevant to the separate question whether the later communication broke the chain of causation.
3. Consumer responsibility. The rules do not accommodate every level of consumer irresponsibility. However, the fact that consumers were actually misled was strong evidence relevant to the objective assessment. The Recorder was entitled to find that the misleading explanation caused the claimants not to read the later documents in full. The covering letter also repeated the misleading description of the loan, while the true cost appeared only later in the bundle.
4. Distinguishing authority. Goodman v Central Capital Limited, [2012] CTLC 158; [2012] EWHC 8 (QB), was distinguishable. There, the sales representative had disclosed that the policy was single-premium, that its cost would be added to the loan, and the amount of the extra borrowing.
5. Causation and appeal. The Recorder’s finding that the misleading communication caused the purchase of the insurance was supported by the evidence. Arguments that the claimants believed the insurance mandatory or regarded the additional cost as immaterial were factual matters for the trial judge and could not be re-argued without grounds for appellate interference.

• Court of Appeal (Civil Division): dismissed Central Capital Limited’s appeal.
• Manchester County Court: following a trial before Mr Recorder Abid Mahmood, awarded the claimants £13,000 inclusive of interest for mis-selling payment protection insurance.