The British Bankers Association has dropped its legal action about the handling of complaints about payment protection insurance. The BBA on behalf of its members judicially reviewed the FSA and the FOS regarding the retrospective elements in the proposed FSA rules for handling PPI complaints. The judgement was handed down on 20 April 2011 and found in favour of FSA and the FOS. The BBA was given until 10 May 2011 to appeal. In the interest of providing certainty for their customers, the banks and the BBA have decided not to appeal.
Stefan Maryniak at uSwitch.com says: "Following Barclays' move to join Lloyds in withdrawing from the appeal process, it was only a matter of time before the banking industry as a whole backed down and admitted defeat. By retreating from the battle, the banks have admitted they were wrong in this mis-selling scandal. They are now going to have to suffer the consequences of their actions, with compensation costs rising to the billions. There is still a huge amount of trust to be rebuilt between banks and consumers, so even though today's move is a step in the right direction, it could be too little too late. With all compensation cases now being looked at, we finally have a victory for consumers and common sense."
Adam Scorer at Consumer Focus adds, “Finally the banks have agreed to face the music on the issue of PPI. The entire episode is an embarrassment for our high street banks - it is now time to wipe the slate clean, pay up and look to learn lessons for the future. PPI highlights that people find it difficult to understand everyday financial products. Banks need to offer more consumer friendly accounts and services that do what they say on the tin. Refunding billions of pounds to millions of people will be a mammoth undertaking and to get it wrong would add insult to injury. We are calling on the banks to put aside the resources that are going to be needed to ensure people get their money back quickly and efficiently.”
Kevin Mountford at moneysupermarket.com says, "This is a welcome move from the banking industry and is a major victory for the thousands of potential claimants who were mis-sold PPI on loans or cards. With the banks now prepared to deal with this issue, customers can now move forward, get in touch with their providers and start to recoup some of the money they unfairly lost. The mis-selling of PPI has been a huge problem for the industry over the past few years and its reputation has suffered massively as a result. The way some providers sold PPI to their customers has resulted in thousands of cases where consumers have been sold unsuitable products. When sold properly, payment protection insurance is an important product that protects those consumers unable to cover their loan or credit card repayments. PPI policies have been an important revenue stream for the banks in the past and the fear is that consumers will end up picking up the bill and we may see the end of free banking as providers seek to recover their losses through other channels."
Income protection insurance news: 12 May 2011