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In the landmark case of Smith v Royal Bank of Scotland Plc [2023] UKSC 34, the Supreme Court’s ruling carries significant implications, emphasising the enduring nature of unfairness in consumer-bank relationships, particularly concerning payment protection insurance (PPI) disputes. In our view the decision underscores the vital role mediation can have in resolving such disputes.

In this case, the court stressed that unfairness persisted even after the termination of PPI policies. This crucial insight challenges the conventional understanding that the relationship ceased to be unfair once the last PPI-related payment was made. Instead, the court highlighted the need for a comprehensive and holistic assessment of the entire history of the relationship between the consumer and the bank.

This nuanced perspective aligns with the principles of mediation, which encourages a thorough exploration of all aspects of a dispute. Unlike litigation, mediation allows parties to delve deeply into the ongoing dynamics of their relationship. Mediators facilitate open and honest communication, enabling both sides to express their concerns fully. In the context of PPI disputes, this approach becomes invaluable as it considers not just the immediate transaction but also the broader context of the consumer-bank relationship.

Mediation offers a flexible and adaptive space where parties can discuss not only the financial aspects of the dispute but also the emotional and relational elements. It allows for a nuanced understanding of the unfair practices and provides a platform for addressing these concerns effectively. By encouraging parties to consider the entirety of their relationship, mediation often leads to more satisfactory and lasting resolutions.

Moreover, the decision’s focus on ongoing relationships challenges the rigid constraints of litigation timelines. Unlike litigation, where adherence to specific deadlines is paramount, mediation operates on a more relaxed schedule. This flexibility enables parties to engage in meaningful dialogue without the pressure of looming court dates. As a result, parties are more likely to engage openly, leading to a deeper understanding of each other’s perspectives and facilitating mutually agreeable solutions.

In essence, the Smith v Royal Bank of Scotland Plc ruling emphasises the need for a comprehensive, ongoing assessment of consumer-bank relationships in the context of PPI disputes. This perspective aligns seamlessly with the mediation process, making it a preferred avenue for resolving such complex issues. Mediation’s ability to foster understanding, promote open communication, and accommodate the nuances of ongoing relationships makes it a powerful tool in achieving just and equitable resolutions for all parties involved.

We do recommend time limited mediation in cases involving banks and consumers. To instruct a mediator please do get in touch with us.