Banks drop fight over payment protection insurance
The banks have conceded defeat in the legal fight over mis-sold payment protection insurance (PPI).
Tens of thousands of customers claim to have been fraudulently sold PPI after finding they were ineligible to claim and the insurance was useless or had been sold to them without their knowledge.
In April, the British Bankers Association (BBA) lost a judicial review against the Financial Services Authority (FSA) and Financial Ombudsman Service over its handling of PPI (BBA v FSA & Anor [2011] EWHC 999 (Admin)). It confirmed earlier this week that it will not be appealing the ruling, stating: “We continue to believe that there are matters of important principle which we will be taking forward in other ways with the authorities.”
Lloyds Banking Group has set aside £3.2bn to pay the claims. Barclays has said it will earmark £1bn, and RBS has said it will set aside £850m.
Richard Caird, partner at SNR Denton, who acted for the FSA, said: “The FSA has rightly welcomed the resolution of the BBA’s judicial review. The decision of Mr Justice Ousely will, of course, bring significant challenges for banks and other sellers of PPI as they bring their complaints handling processes into line with the FSA’s requirements. The decision also brings, however, welcome clarity to the obligations of firms considering whether to pay redress to consumers, particularly the obligation to take breaches of the FSA’s Principles for Business into account in those considerations.”
