Landmark ruling in Smith and Another v RBS alters landscape for PPI claims

In the case of Smith and Another v Royal Bank of Scotland [2023] UKSC 34, the Supreme Court has reversed the Court of Appeal's decision, rejecting RBS's limitation argument. This case has significant implications for clients of Judge & Priestley Credit Solutions. Two claimants brought separate cases under the Consumer Credit Act, alleging an "unfair relationship" with RBS due to PPI agreements. The Court of Appeal ruled in favour of RBS, claiming that the claims were time-barred. However, the Supreme Court held that the claims were brought within the time limit, impacting future PPI claims by extending the timeframe for initiating them. Financial institutions will need to adapt to this ruling, and its long-term effects on the credit industry remain to be seen.

In the recent case of Smith and Another v Royal Bank Scotland plc [2023] UKSC 34, the Supreme Court has overturned the previous decision of the Court of Appeal, specifically disagreeing with the bank’s limitation argument in a case that could have significant implications for the clients of Judge & Priestley Credit Solutions.


The case was initiated when two claimants who had taken out credit card agreements with RBS, also purchased PPI from the bank. Smith and Burrell initiated separate claims at the County Court in 2019. The claims were brought under s140A of the Consumer Credit Act 1974 (CCA) on the general basis that there has been an “unfair relationship” between the parties. The pair pleaded that under s140.B of the CCA, RBS should pay to them all the money received by the bank in commission for the PPI agreements they each also purchased at the time of entering into the credit agreements, with added interest. Both Claimants were successful, and decisions were upheld on appeal by the county court judge.

Court of Appeal

However, on second appeals the Court of Appeal ruled in favour of RBS stating that in each case the specific time limit to bring a claim had expired. It was stated that the claims were statute barred by Section 9 of the Limitation Act 1980 and the Court of Appeal subsequently dismissed the original claims. The important point from the case was Birds LJ emphasising that time started to run from the date the PPI policy ended and therefore the claim would become statute barred, surpassing the 6 year limitation period for the claimants.

Supreme Court

Upon appeal to the Supreme Court, it was held that both claims were brought before the relevant time limit expired, restoring the original county court order. It was concluded that both claims were brought within the relevant limit and that time did not run from the date the PPI policy ended as stated by Birds LJ. Instead, the 6-year time limit under S.9 Limitation Act 1980 does not commence until the credit relationship ends.  This is the case even if the borrower had stopped paying for PPI at some earlier time.

What does the case mean for the future?

As we have seen, it is no longer open to a creditor to pose the argument put forward by Birds LJ in the Court of Appeal. The Judgement is therefore likely to influence cases where the credit relationships are still active but once had PPI policies in place, that were thought to have been statute barred at the time. There have also been several PPI claims that have already been issued and heard leading up to this Judgement. Not only is the current Judgement likely to provide further awareness of potential new claims, but the new ruling may also give claimants an extended time frame to initiate a claim that wasn’t there before. There is likely to be a new window of opportunity for claimants to pursue a PPI claim where a credit relationship was held alongside, that came to an end within the last 6 years. The prima facie defence of arguing PPI agreements with credit agreements must be statute barred from the end of the PPI agreement by financial institutions is no longer a viable option. However, it will be important that the courts assess the facts of each claimant bringing a claim to understand the specific reasoning as to why a claim was not initiated sooner. There is no doubt however, that financial institutions such as the RBS will be looking at new ways to respond to this new ruling surrounding PPI and credit agreements that are in the scope of the last 6 years.

It is also worth bearing in mind the court’s view that this decision should not drastically impact RBS or the wider credit industry because the court retains its general discretion as to what remedy, if any at all, might be awarded.

Whether this sentiment of the court is true for the industry or was simply a last ditched attempt by the supreme court to caution against another wave of stock PPI claims being filed and overwhelming the county courts remains to be seen. It seems likely, however, that the ripples of this decision will continue to be seen for a long time to come.

Written by: Ben Carter, Solicitor

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