Court of Appeal confirms DISP redress payments do not support contribution claims

The Court of Appeal has confirmed that regulatory redress paid under the FCA's DISP rules does not amount to a "liability" for the purposes of the Civil Liability (Contribution) Act 1978 (the 1978 Act), in a decision with implications for how insurers and firms approach contribution claims arising from regulatory redress schemes.

Judgment was handed down on 15 September 2026 by Lewison, Holgate and Cockerill LJJ. The appeal arises from long-running litigation over the past sale of payment protection insurance (PPI). The claimants, AXA France IARD S.A. and AXA France Vie S.A. (AXA), are the successors to insurers who had underwritten the PPI products in question. The defendants, Santander Cards UK Ltd and Santander Insurance Services UK Ltd (Santander), are the successors to the businesses that had sold those products to customers, doing so under an agency agreement entered into between their respective predecessors.

Two issues were before the court. The first was whether an indemnity clause in that agency agreement protected Santander from AXA's claim. The High Court had found that the indemnity had retrospective effect, meaning it would indemnify AXA for the acts and omissions of Santander's predecessors in relation to PPI sales and marketing conduct that occurred before the agreement was entered into. On appeal, the court reached a different conclusion - looking at the contract in its entirety, it determined that the indemnity was forward-looking only and did not extend back to cover conduct that predated it. Santander's appeal on this point succeeded.

The second issue concerned a cross-appeal brought by AXA on the status of redress payments under DISP. AXA argued that, because a customer could, in principle, have brought a civil claim for the same loss, the redress paid to customers under the regulator's rules should be treated as a "liability" capable of supporting a contribution claim under section 1(6) of the 1978 Act - specifically, a liability that had been, or could have been, established in an action brought in England and Wales by the person who suffered the loss.

The court did not accept this. Its reasoning centred on where the duty to pay redress actually comes from: a firm pays it because the Financial Services and Markets Act 2000 (FSMA) and the DISP handbook require this of firms in their dealings with the regulator, not because a court has found the firm liable to any individual customer. Section 138D of FSMA does give consumers a separate route to court for certain breaches of the rules in DISP 1, but a win there would only produce an award of damages for the regulatory failure - it says nothing about whether the firm was liable on the underlying PPI complaint itself. The same reasoning defeated AXA's fallback position on Financial Ombudsman Service (FOS) awards - AXA had also argued that enforcement of a FOS money award, under paragraph 16 of Schedule 17 to FSMA, amounted to an action establishing a liability for 1978 Act purposes. The court disagreed, finding that enforcing a FOS award does not convert it into that kind of liability-establishing action either.

The decision clarifies that redress paid by a firm, or its predecessor, to satisfy regulatory obligations under DISP falls outside the scope of the 1978 Act, and does not by itself provide a basis for seeking contribution from other parties connected to the underlying conduct - even where those parties' predecessors were involved in the original sale or underwriting. This potentially has a significant impact on the scope of possible recovery for firms (and their insurers) who are required to make payment under any form of single-firm or industry-wide compensation scheme

Case: AXA France IARD S.A. and another v Santander Cards UK Ltd and another [2026] EWCA Civ 1185 (15 September 2026) (Lewison, Holgate and Cockerill LJJ).