DISP App 3.6 Determining the effect of a breach or failing at step 1

1This section applies to step 1.

Where the firm determines that there was a breach or failing, the firm should consider whether the complainant would have bought the payment protection contract in the absence of that breach or failing.

In the absence of evidence to the contrary, the firm should presume that the complainant would not have bought the payment protection contract he bought if the sale was substantially flawed, for example where the firm:

1. (1)

   pressured the complainant into purchasing the payment protection contract; or

2. (2)

   did not disclose to the complainant, in good time before the sale was concluded, and in a way that was fair, clear and not misleading, that the policy was optional; or

3. (3)

   made the sale without the complainant's explicit agreement to purchase the policy; or

4. (4)

   did not disclose to the complainant, in good time before the sale was concluded, and in a way that was fair, clear and not misleading, the significant exclusions and limitations, i.e. those that would tend to affect the decisions of customers generally to buy the policy; or

5. (5)

   did not, for an advised sale (including where the firm gave advice in a non-advised sales process) take reasonable care to ensure that the policy was suitable for the complainant's demands and needs taking into account all relevant factors, including level of cover, cost, and relevant exclusions, excesses, limitations and conditions; or

6. (6)

   did not take reasonable steps to ensure the complainant only bought a policy for which he was eligible to claim benefits; or

7. (7)

   found, while arranging the policy, that parts of the cover did not apply but did not disclose this to the customer, in good time before the sale was concluded, and in a way that was fair, clear and not misleading; or

8. (8)

   did not disclose to the complainant, in good time before the sale was concluded, and in a way that was fair, clear and not misleading, the total (not just monthly) cost of the policy separately from any other prices (or the basis for calculating it so that the complainant could verify it); or

9. (9)

   recommended a single premium payment protection contract without taking reasonable steps, where the policy did not have a pro-rata refund, to establish whether there was a prospect that the complainant would repay or refinance the loan before the end of the term; or

10. (10)

    provided misleading or inaccurate information about the policy to the complainant; or

11. (11)

    sold the complainant a policy where the total cost of the policy (including any interest paid on the premium) would exceed the benefits payable under the policy (other than benefits payable under life cover); or

12. (12)

    in a sale of a single premium payment protection contract, failed to disclose to the complainant, in good time before the sale was concluded, and in a way that was fair, clear and not misleading:

    1. (a)

       that the premium would be added to the amount provided under the credit agreement, that interest would be payable on the premium and the amount of that interest; or

    2. (b)

       (if applicable) that the term of the cover was shorter than the term of the credit agreement and the consequences of that mismatch; or

    3. (c)

       (if applicable) that the complainant would not receive a pro-rata refund if the complainant were to repay or refinance the loan or otherwise cancel the single premium policy after the cooling-off period.

Relevant evidence might include the complainant's demands, needs and intentions at the time of the sale and any other relevant evidence, including any testimony by the complainant about his reasons at the time of the sale for purchasing the payment protection contract.