Figurasin & Anor v Central Capital Ltd

The Court of Appeal dismissed an appeal by Central Capital Limited against a finding that the firm had breached ICOB 2.2.3 R by communicating information that was not clear, fair and not misleading in a telephone sales call about a secured loan with payment protection insurance (PPI). The trial judge found the sales representative failed to explain that the PPI was funded by a separate single premium loan of £8,750, and that omission materially misled the borrowers into believing they were borrowing only £25,000 at a monthly cost of £393.68. The court held that the subsequent written documents containing a full breakdown did not cure the earlier misleading oral communication and that the Recorder was entitled to find causation and award damages under the Financial Services and Markets Act 2000 s.150(1).

This was an appeal from a judgment of Mr Recorder Abid Mahmood in the Manchester County Court in favour of Mr and Mrs Figurasin, who sought damages for mis-selling of payment protection insurance (PPI) sold in conjunction with a secured loan arranged by Central Capital Limited (CCL). The claimants had applied for a £25,000 loan to consolidate debts. A recorded telephone conversation between the borrowers and CCL’s sales representative formed the primary basis of the claim.

The claim was pleaded as a breach of the Insurance Conduct of Business Rules (ICOB), in particular ICOB 2.2.3 R (a firm must take reasonable steps to communicate in a way that is clear, fair and not misleading) and ICOB 2.2.5 G. The Recorder found that during the telephone call the representative stated the monthly repayment of £393.68 for a £25,000 loan and said that the payment included PPI, but did not explain that the insurance was a single premium to be financed by an additional loan of £8,750 (giving a true total borrowed of £33,750 and an insurance cost of £12,248.40). The Recorder concluded that the oral explanation was unclear, unfair and misleading and that the claimants relied on it and were caused loss. The Recorder awarded damages of £13,000 (inclusive of interest).

On appeal CCL argued the telephone call and subsequent written documents should be treated as one process and that the later, detailed loan agreement would have made the position clear; CCL also challenged causation. The Court of Appeal rejected those arguments. The court held that if the communications are separate, the initial breach stands even if later documents are accurate, unless the later documents effectively break the chain of causation. On the facts the Recorder was entitled to find the initial oral communication was misleading, that the written material did not remedy that defect, and that causation was established. The appeal was therefore dismissed.

Appeal dismissed. The Court of Appeal held that the Recorder was entitled to find that CCL breached ICOB 2.2.3 R by failing in the telephone communication to explain that the PPI was funded by a separate single-premium loan of £8,750. The subsequent written documents did not effectively cure the misleading oral explanation, the borrowers had relied on the oral communication, and causation was established; accordingly the Recorder’s award of damages was upheld.

Appeal from a judgment of Mr Recorder Abid Mahmood at Manchester County Court (case reference 1CH02951). The Recorder found for the claimants and awarded damages; the defendant appealed to the Court of Appeal, which dismissed the appeal in [2014] EWCA Civ 504.