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20th April
2011
written by Paul Flintoft

LATEST: Today (9th May, 2011) British Bankers Association announced that they will not appeal the judicial review.  Make a PPI claim now or risk missing out.

Mr Justice Ouseley ruled at the Royal Courts of Justice in London this morning in favour of the FSA and the Financial Ombudsman in a judicial review over PPI measures brought by the British Bankers’ Association in October.

The FSA says firms have a duty to assess every complaint relating to payment protection insurance before deferring cases in light of today’s judicial review ruling.

Assuming the ruling stands, banks must proactively contact consumers who have been mis-sold and offer compensation – even where they’ve yet to complain. The FSA estimates this could lead to over £3.2 billion in compensation.

What Is PPI?

PPI – payment protection isnurance is the insurance often sold alongside credit cards, loans and other finance agreements to insure payments are made if the borrower is unable to make them due to accideent, sickness or unemployment.  It is sometimes called ASU (accident, sickness and unemployent) cover.

High numbers of policyholders have found that the insurance is useless to them because they are illegible to claim.  For example, they mey be self-employed, over 65 years of age or were not asked about existing medical conditions.

>>> Find out if you can make a claim for mis-sold PPI

The banks (through the BBA) had challenged the instruction from the FSA on the grounds that it would force them to apply new standards to past sales that were made before the principles were brought in.

The decision today threw out the banks’ objections. However, the BBA confirmed it is assessing whether it will appeal the decision – and it has confirmed banks will continue to block claims until the issue is settled.

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.  Any complaints that are directly affected by the judicial review and therefore cannot be decided will continue to be placed on hold until the next steps have been decided.’

The FSA said: ‘Our primary aim has always been to get proper redress, once and for all, for those with genuine complaints. We believe this decision signals the end of years of poor complaint handling and will trigger a dramatic improvement in the way customers are treated when complaining.’

The regulator warned that it did not sanction any postponement to dealing with PPI complaints, and that enforcement action may follow if banks refuse to deal with complaints. Ultimately, the FSA could withdraw banks’ licenses to conduct business in certain areas.

Natalie Ceeney, chief ombudsman, said “This judgment is very clear-cut. I would like to see businesses showing commitment to sorting their customers’ complaints promptly.”

The BBA (British Bankers Association) has said the processing of PPI complaints will still be on hold until the banks have decided what action they wish to take in light of the ruling.

The BBA launched a judicial review against the FSA and the FOS at the High Court in London in October.  The move followed a policy statement published by the FSA in August outlining a package of measures to protect consumers buying PPI. The measures included guidance to ensure complaints are handled properly, an explanation of when firms should analyse past complaints, and an open letter setting out common sales failings.  Firms were supposed to implement the measures by December 1.

What to do With Your Potential PPI Claim

Even though your bank may eventually contact you, it is still worth putting in a claim if you believe you have been mis-sold PPI (see our PPI claim section).

Banks are unlikely to contact everyone so you could miss out if you don’t act.  What’s more, if they appeal and cases continue to stay on hold it is worth claiming to prevent further delays.

Even if a bank puts you on hold or rejects you, you still have a right to use the Financial Ombudsman Service.

On average, firms reject around 60% of complaints made to them, but some reject almost all of them but the Ombudsman upholds over two thirds in favour of consumers.

Useful Links

>>> More information on making a PPI claim
>>> Speak to a specialist financial claims adviser
>>> Debt information and advice
>>> Keep up-to-date – grab the free Money Advice newsletter

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