Simplysure paid a monthly fee to Personal which in turn paid
Simplysure commission on policies it sold. Personal, which is
authorised by the Financial Conduct Authority (and its predecessor)
under the Financial Services and Markets Act 2000 (the Act),
provided Simplysure with standard forms for a fact-find to be
completed with potential clients' information to enable advice
to be given. Simplysure used employees who had not been authorised
by Personal to complete the initial parts of the form before they
were then referred on to an authorised adviser.
On discovering this, Personal terminated the Agreement on the
basis that there was a failure to comply with the terms of the
Agreement and the Act. Although Simplysure was an exempt person
under s39 of the Act, and so came within the exception to the
general prohibition under s19 of the Act, Personal said
Simplysure's unauthorised personnel were not. This created a
criminal offence under s23 of the Act and gave Personal the right
to terminate the Agreement for repudiatory breach.
Simplysure commenced proceedings for wrongful termination and
damages, being the lost commission on renewed policies introduced
by it. It was successful at first instance, but Personal
The Court of Appeal allowed the appeal. It held the completion
of the first parts of the fact-find by unauthorised persons was in
breach of the general prohibition under the Act. As such a breach
could render Personal criminally liable and lead to regulatory
sanction, the clause in the Agreement providing that Simplysure
would abide by the rules of the regulator (FCA) and Personal's
compliance and procedure manuals was a true condition, breach of
which entitled Personal to terminate, regardless of whether it had
suffered any loss. The Agreement was lawfully terminated.
Personal was not in breach of the Agreement and Simplysure was
not entitled to damages for premature termination or for renewal
commissions on policies introduced during the currency of the
Agreement. There was nothing in the Agreement that explicitly or
implicitly provided that payment of such commission would remain
payable after termination for breach.
Things to consider
Generally, future obligations of the innocent party to a
contract come to an end if the contract is terminated by the
innocent party on the ground of the other party's repudiation
or breach of a condition of the contract. This is, of course,
subject to any clear term in the contract providing to the contrary
so, as ever, the wording of the contract will be highly
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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