BBA - v FSA - PPI Judicial Review

[citizenB]

http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/039.shtml

 

FSA/PN/039/2011

20 April 2011

 

We welcome the High Court’s dismissal of the British Bankers’ Association’s (BBA) and Nemo Personal Finance Limited’s (Nemo) legal challenge to our payment protection insurance (PPI) measures.

 

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.

 

There have been more than 1.5 million complaints made about PPI since the Financial Services Authority (FSA) took over regulation of it in 2005. On average, firms have rejected around 60% of the complaints made to them, but some rejected almost all of them. However, the vast majority of complaints referred to the Financial Ombudsman Service (the Ombudsman) are found in the consumer’s favour.

 

However this is not the end of the process: the BBA and Nemo may seek to appeal the court’s judgment.

 

The FSA has not put a waiver in place so firms must continue to deal with complaints where possible, including letting customers know they can refer their complaint to the Ombudsman if they are unable to progress it.

 

Failure to do so may result in Enforcement action.

[cerberusalert]

The BBC article has changed since I read it at 10.30, in that version it quoted that banking woman as saying that they would probably put present claims on hold whilst they decided whether to appeal or not. Obviously if they were to appeal any claims would remain on hold.

[cerberusalert]

Banks have 21 days to consider whether to appeal the ruling. The BBA said that complaints would continue to be placed on hold until it had decided whether or not to make an appeal.

http://www.ft.com/cms/s/2/1b687c0a-6a6d-11e0-a464-00144feab49a.html?ftcamp=rss#axzz1K3v3nXiN

[rebel11]

'Banking woman', Angela Knight?

 

The BBC article has changed since I read it at 10.30, in that version it quoted that banking woman as saying that they would probably put present claims on hold whilst they decided whether to appeal or not. Obviously if they were to appeal any claims would remain on hold.

[cerberusalert]

I call her the banking woman.

[maroondevo52]

Current lender updates:

 

 

 

Lloyds – Will deal with claim, investigate upto the final response, will not give any final responses until the issues have been sorted – no timescale given.

 

HSBC – all new claims will be acknowledged, then no further work will be done, any which had a final decision made before the 08/10/2010 will still be issued

 

Barclays – Will acknowledge claims, will work on if needed but no final response will be issued.

 

 

MBNA – will acknowledge claims, nothing further will be done, no further work and no final responses.

 

 

Halifax - new cases will be acknowledged, any claims after the 08/10/2010 can't have a full review done so no final response, any claims before that date that had been reviewed will still have a final response issued on them.

 

RBS – all claims are being dealt with in the usual way, reviewing and issuing final responses, any claims that have been affected by the JR will be notified, no explaination of which claims could be affected.

 

Lloyds puts PPI claims on hold in defiance of regulator:

 

Defiance

A Lloyds spokeswoman says: "We will stand by any settlements that have already been made to customers. The court case will not affect those offers.

"However, while the court is considering the issues raised by the BBA, any PPI sales-related complaints will be on hold until further notice. This decision was taken in full consultation with the BBA."

That statement is in defiance of the FSA's stance.

 

The regulator said on Friday: "In the interests of consumers, firms will be expected to continue handling complaints while this process is ongoing."

It is understood the FSA could take action against banks that don't follow those guidelines.

 

Meanwhile, a BBA spokeswoman says: "The only people who can put complaints on hold are the FSA, the Ombudsman or the courts."

Bank charges claims were put on hold in July 2007 pending the result of the historic case into overdraft fees, which banks won.

But that action was permitted by the FSA, the Ombudsman and the courts.

 

What can consumers do?

 

The Financial Ombudsman Service, the independent arbitrator, is still hearing complaints. You must normally complain to your bank and wait until a firm rejection or if the issue has not been resolved within eight weeks, before involving the Ombudsman.

It says in this case it will treat a hold as a trigger to allow it to investigate.

 

A whopping 81% of consumers who complain to the Ombudsman on PPI win their case. Yet only an average of 5% of rejected complainants, across all product sectors, take their case to the arbitrator.

 

MoneySavingExpert.com comment

 

Martin Lewis, MoneySavingExpert.com creator, says: "This is an outrage. The bank charges reclaiming hold was ordered by the courts and agreed with by the FSA – this is something quite different.

 

"This type of action is like a black-hatted cowboy riding into town, whooping and yelling, and pretending they're untouchable. It's time for the FSA to polish up its sheriff's badge, kick in its spurs and shoot them down.

"We know 81% of people who go to the Ombudsman with PPI complaints win. We know there has been systemic mis-selling.

"What we need to see now, after the charade of the bank charges technicality, is the institutions of state provide real justice for the millions who've been mis-sold billions worth of PPI.

 

"This must be sorted urgently. The FSA needs to check its rule book to see what else can be done. In extremes, it should arrange that customers bypass their own banks and simply complain direct to the Ombudsman.

"It would be quite staggering if it were held to ransom."

[cerberusalert]

As usual, a law unto themselves. They should really should be done for contempt.

[HSBCrusher]

The FSA has not put a waiver in place so firms must continue to deal with complaints where possible, including letting customers know they can refer their complaint to the Ombudsman if they are unable to progress it.

 

Failure to do so may result in Enforcement action.

 

 

The regulator said on Friday: "In the interests of consumers, firms will be expected to continue handling complaints while this process is ongoing."

 

LLoyds

 

A Lloyds spokeswoman says: "We will stand by any settlements that have already been made to customers. The court case will not affect those offers.

"However, while the court is considering the issues raised by the BBA, any PPI sales-related complaints will be on hold until further notice. This decision was taken in full consultation with the BBA."

 

we need a newsletter IMHO

[rebel11]

The banks have to be pro active, go over their PPI sales to establish if they mis-sold PPI, beeb reckons it could cost the banks £4.5 billion.

[johnnymitch]

Hi CB ... this is excellent news !

 

however , as I've just posted on the main headlines site :

 

They're trying to play the same old time wasting game they did with Bank Charges ... however , this time the FSA hasd not given them a waiver ... so all complaints must be dealt with as normal ... or they should be reported to the Ombudsman .....

 

They have been told to deal with these ... they should not get away with flouting the rules and resorting to the same old corrupt fiddles to get out of it ...

 

IMHO the FSA helped them out of it the last time ... let's hope this time they show some backbone and order compliance .... without the banks being allowed to drag this lot all the way to the Supreme Court again ...I think it's abuse of the system ....

 

Let's keep the pressure on ... don't give 'em an inch ....

[the_shadow]

The banks have to be pro active, go over their PPI sales to establish if they mis-sold PPI, beeb reckons it could cost the banks £4.5 billion.

 

even so as most of the decisions of the banks basically deny any misselling and cause people to go to the ombundsman will this be any different, they surely will just say this one was sold correctly... next....

 

Cynical of me I know...

[rebel11]

You've got it in a 'nut shell', these banks need to be fined for failing to look into a complaint correctly. I'd stick £50,000 for each complaint where it's found that they haven't looked into it. A similar situation occured when folk were told to Opt Out of Company Pensions in favour of a Personal Pensions, about 20 years ago.

 

even so as most of the decisions of the banks basically deny any misselling and cause people to go to the ombundsman will this be any different, they surely will just say this one was sold correctly... next....

 

Cynical of me I know...

[Michael Browne]

Full Judgement is here:

http://www.bailii.org/ew/cases/EWHC/Admin/2011/999.html

 

 

 

 

Q&A: What now for payment protection insurance?

http://www.bbc.co.uk/news/business-13143819:

 

The UK's banks have lost an attempt to thwart new regulations on how they should sell payment protection insurance (PPI).

 

Crucially, the rules also lay down how the banks should deal with past cases of potential mis-selling of PPI, which could lead to an extra compensation bill running into billions of pounds.

 

The High Court heard a judicial review brought principally by the British Bankers' Association (BBA) against the recently updated rules of the Financial Services Authority (FSA) and the Financial Ombudsman Service (FOS).

 

The judges rejected the BBA's arguments that the rules were unfair because they were retrospective.

 

So, what happens now?

Possibly not much yet.

The BBA has 21 days in which to decide to appeal. In the meantime individual banks are still putting on hold many of the new PPI complaints that are being lodged with them.

If an appeal goes ahead, then thousands of new complaints will continue to pile up.

 

What if the banks give in?

Under the FSA's new rules, banks and other lenders such as credit card companies will have to be much more careful about how they sell new PPI policies to borrowers.

Separately, the Competition Commission is bringing in new rules which will stop lenders selling PPI at the point when they grant a loan.

So the whole business faces a severe restriction anyway.

 

What about the compensation?

This is the really big issue.

The banks were told two years ago to re-examine complaints they had already rejected.

The new rules suggest that additionally they will have to contact all past PPI customers - even those who have never complained.

The FSA estimated last year that if about 20% of those responded, the industry could be landed with an extra compensation bill of £2.7bn, plus administration costs of up to £315m.

In the recent court hearings, that potential bill for the industry was put even higher, at about £4.5bn.

 

So how many people will all this involve?

The FSA estimated that its new measures would boost the expected number of complaints to 550,000 a year for the next five years - in other words 2.75 million.

But that was based on the 20% response rate mentioned above.

Clearly there is scope for many more people to complain, and for this to cost banks and other lenders much more.

 

How much compensation is likely to be paid?

Across the whole industry, no-one knows. It is all informed guess work so far.

But the FSA estimated that someone who had been mis-sold a single-premium policy where they paid all the cost up-front, might be repaid an average of £1,800.

Someone who had bought a policy requiring regular premiums would receive on average £900.

 

So, what should I do if I think I was mis-sold PPI?

If you still have the paperwork, look back at all your loans and see if there was any evidence you bought a PPI policy.

Check the details of the PPI policy itself, if you have it. Ask yourself some questions:

 

• Did you realise at the time you were buying this insurance?
  

 

• Were you told (falsely) you had to buy it?
  
• Did it really cover you in the first place? (Self- employed people, for example, are not covered by PPI)
  
• Did you even need it?
  

If you think you have grounds for complaint, write to the firm which sold the policy and lodge your complaint.

If it is rejected, or nothing happens within eight weeks, you can complain to the Financial Ombudsman Service (FOS).

 

What will the FOS do?

It can look at your case again.

It received 100,000 such complaints in the last financial year - and upheld about 75% in favour of the customers.

It is currently receiving about 5,000 PPI complaints a week, so a backlog is building up very quickly.

Edited April 20, 2011 by Michael Browne

[maroondevo52]

Martin Lewis has just said if they don't lift the 'hold' on current claims they should have their licence to sell insurance withdrawn.

[cerberusalert]

I'm surprised they haven't thrown their toys around & threatened to run away abroad like they did over the bonus payments.

[HSBCrusher]

Martin Lewis has just said if they don't lift the 'hold' on current claims they should have their licence to sell insurance withdrawn.

they are more likely to fly to the moon on a winged horse than get anything more than a mild slapped wrist.

 

[cerberusalert]

They've got away with too much for too long & now they think they're teflon coated. It would be interesting to see a list of major shareholders in these banks because ten pound to a penny strings are well and truly being tugged behind the scenes.

[rebel11]

There is only one way to stop the banks thinking they can do what they like, thats real competition, a People's Bank if you like. Maybe where the people are the shareholders. A reciprocal relationship built on traditional values, where it's about humans and less so computers.

[silverfox1961]

There is only one way to stop the banks thinking they can do what they like, thats real competition, a People's Bank if you like. Maybe where the people are the shareholders. A reciprocal relationship built on traditional values, where it's about humans and less so computers.

 

Weren't they once called Building Societies ?

[cerberusalert]

Weren't they once called Building Societies ?

 

Trustee Savings Banks until they were sold by Maggie Thatcher.

 

http://en.wikipedia.org/wiki/Trustee_Savings_Bank

[caro]

Between us my colleague and I have had 4 phone calls from ambulance chasers today inviting us to reclaim PPI and charges on loans. We thought they seemed a bit keen today. This obviously explains it, but I think we can be confident the banks won't accept this and delays will continue.

[caro]

I call her the banking woman.

 

Bless you. What a gentleman. I call her much much worse.

 

I notice they're only talking about contacting people going back 5 years. I wonder what will happen if people claim going back further if they've only found out about this in the last 6 years. Pound to a penny they'll try and wriggle out of paying it - or anything of it come to that.

[slick132]

I suppose the banks will say they keep no records beyond 6 years if you try claiming back further. Same as they are now doing with credit card penalty charges.

 

People will need to have their own records if they want back older PPI charges.

Edited April 30, 2011 by slick132
typo

[MARTIN3030]

The result was expected,as was the response by the BBA,as usual they have devised a plan of action which comes as no suprise.

I bet Lloyds have saved a fortune already with their so called "offers" many have probably agreed to that knowing that the FOS route is likely to take 18 months if not longer.

The irony is that these state owned banks are draining the resources of the FOS-and ignore the state run regulators like some Banana republic.

Well looks like people will have to just take them to Court,cant see any blanket stays for this one.

I think also that if there was anything in the FSA handbook to take them to task on,surely it would have been raised by now.

[HSBCrusher]

indeed.

 

its reminding me of the bank charge days of old.

 

Negotiation? Nah, go right for the jugular in court.