UK banks have lost the latest round of the
ongoing legal dispute relating to the alleged mis-selling of
payment protection insurance (PPI).
To the obvious delight of a bank-bashing
UK popular press, the High Court in London ruled on 20 April that
UK banks must re-examine old cases from consumers claiming
compensation for mis-sold PPI policies.
Go deeper with GlobalData
On behalf of the industry, the British Bankers
Association (BBA) had sought a judicial review of a Financial
Services Authority (FSA) – the UK regulator – policy
statement on PPI complaints and guidance published by the
Financial Ombudsman Service (FOS).
In particular, the BBA was annoyed that the
FSA and the FOS were applying new, consumer-friendly rules, to old
sales.
In a statement, the BBA said:
“We are disappointed with today’s judgment and
now need to consider the details of it very carefully as well as
next steps, including whether it would be appropriate to apply for
permission to appeal.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“Any complaints that are directly affected by
the judicial review and therefore can not be decided will continue
to be placed on hold until the next steps have been decided.”
The BBA has a period of 21 days to decide if
it will appeal.
According to the UK banks, they face a bill of
over £4bn ($6.6bn) in the next five years to settle
complaints. The final bill may be well in excess of this
figure as banks will incur additional costs to implement new
complaint handling procedures.
There is also concern that consumer groups
hostile to the banking sector will encourage additional complaints
to be submitted.
Since last October, the FOS has received
around 5,000 new PPI complaints each week; more than 16m PPI
policies have been sold since 2005.
