Supreme Court refuses permission to appeal in joined appeals seeking to challenge the finality of settlements

On 19 March 2025 the Supreme Court published its decision to refuse the Claimants’ applications for permission to appeal the Court of Appeal’s decision in Harrop v Skipton Building Society and Self v Santander Cards UK Limited.  This will be welcome news for FCA regulated firms facing attempts to reopen previous settlements with customers.  Below we recap the Court of Appeal decision which firms can continue to take comfort from. 

On 26 September 2024, the Court of Appeal handed down its judgment in the joined appeals of Jason Harrop v Skipton Building Society and Christine Self v Santander Cards UK Limited. The judgment is here.

The Appellants in the joined appeals had each taken out payment protection insurance policies with their lenders (the Policies) and subsequently advanced complaints to their lenders about the Policies. The complaints resulted in settlement offers being made by the lenders on full and final settlement terms (Settlement Terms), which in due course were accepted by the Appellants.

In their appeals to the Court of Appeal, the Appellants argued that their prior acceptance of the Settlement Terms did not preclude them from advancing subsequent litigation against their lenders in which they alleged the existence of unfair relationships (pursuant to Section 140A of the Consumer Credit Act 1974). The Court of Appeal dismissed the Appellants’ appeals and the Appellants applied for permission to advance third appeals to the Supreme Court.

On 29 January 2025, the Supreme Court refused the Appellants’ permission to appeal applications.

The dispute at the core of the Appellants’ claims

The dispute at the core of the Appellants’ issued claims was whether the lenders’ non-disclosure of commissions retained by them arising from the sale of the Policies gave rise to unfair relationships (as it had done in the seminal case of Plevin).

In each of the cases before the Court of Appeal: (i) the lender had retained commission amounting to more than 50% of the policy premium paid by the Appellant; and (ii) the amount of the settlement sum offered and accepted reflected an amount equating to the commission that was retained by the lender to the extent that this was in excess of 50% of the policy premium paid – this was aligned to guidance from the FCA in Policy Statement PS17/3 and bespoke provisions in the FCA’s Handbook (DISP App 3).

Each lender argued that the claim issued against it was not permissible owing to the fact that the subject matter of the claim had already been compromised by virtue of the prior acceptance of the Settlement Terms.

What were the issues considered by the Court of Appeal?

The Appellants argued that: (i) their acceptance of the Settlement Terms did not give rise to legally binding settlements between them and their lenders; and (ii) even if their acceptance of the Settlement Terms did give rise to legally binding settlements, their relationships with their lenders (taken with the Settlement Terms) remained unfair, and the Court retained a jurisdiction to remedy the unfairness by reopening the Settlement Terms.

Unsurprisingly, the Court of Appeal’s judgment paid close attention to the detail of the complaints advanced by the Appellants and the actual wording used by the lenders in the complaint responses / Settlement Terms. As the Court of Appeal put it: “whether the process of the offering of redress and the acceptance of an offer that has been made gives rise to a legally binding agreement depends on the terms used by the parties, whether they intend to create legal relations, and whether, assuming the other criteria are met, the respondent gives good consideration for the agreement.”

The Appellants contended that good consideration had not been provided as the lenders were already bound by law (i.e. the provisions in DISP) to pay the settlement sums that had been paid. This argument failed. The Court of Appeal was satisfied that “DISP does not oblige the payment (or offering) of a specific sum” and that the lenders were only subject to an obligation to make payments to the Appellants upon the Appellants’ acceptance of the Settlement Terms. Agreeing with the lenders, the Court of Appeal concluded that the lenders had provided good consideration for the settlements entered into by “making an offer of payment which, upon acceptance, created something to which the Appellants had not previously been entitled, namely an enforceable contract giving them a right to payment of a specific sum”.

It was common ground before the Court of Appeal that the court retained a jurisdiction to consider the fairness of the relationships between the Appellants and the lenders pursuant to sections 140A and 140B of the Consumer Credit Act 1974. This position was aligned to the decision of Nugee J in Holyoake & Anor v Candy & Ors [2017] EWHC 3397 (Ch) (part of which was adopted by the Court of Appeal). In each of the cases before the Court of Appeal, the court refused to go behind the Settlement Terms concluded, recognising that as a matter of public policy “the court should be very slow” to do so.

Particular issues of interest

The Court of Appeal’s judgment provides some comfort for FCA regulated firms, which will undoubtedly be well received. Specifically:

1. In drawing the conclusions it did, the Court of Appeal had a keen regard for the detail of the provisions of DISP. Of particular interest was the court’s conclusion at paragraph 79 of the judgment that “there is nothing in DISP or elsewhere that either says or implies that a person may not attempt to achieve a binding settlement of present or potential future claims when making an offer in conformity with its obligation under DISP 1.4.1R”. DISP 1.4.1R contains the FCA’s rules on steps regulated firms must take when investigating, assessing and resolving complaints. The provision is not confined to complaints relating to payment protection insurance policies. This will be of interest to regulated firms, particularly in view of the current climate in relation to motor finance commission claims.

2. One of the issues considered by the Court of Appeal was the extent to which (if at all) the Appellants’ failure to obtain legal advice in relation to their entry into the Settlement Terms should impact the Court’s fairness assessment (both Appellants had been advised by claims management companies). At paragraph 94 of the Court of Appeal’s judgment, it was held “there are doubtless some compromises whose terms or consequences cannot properly be understood by a lay party without having detailed legal advice. There is, however, no reason to assume that legal advice is required in every case of compromise". Regulated firms are well versed in dealing with large volumes of complaints originating from claims management companies. They will be pleased to see that binding settlements that have been concluded with complainants will not necessarily always be open to attack, simply because the complainant was not advised by a qualified lawyer.

TLT acted for Skipton Building Society in this matter.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2025. Specific advice should be sought for specific cases. For more information see our terms & conditions.