Out-Law News | 09 May 2011 | 2:01 pm | 1 min. read
The news follows announcements by Lloyds Banking Group and Barclays that they had withdrawn their support for any prospective appeal against last month's High Court decision.
The BBA, acting on behalf of a number of high street banks, applied for judicial review of the approach taken by the Financial Services Authority (FSA) and Financial Ombudsman Service (FOS) to PPI mis-selling complaints, claiming that the new regulations applied stricter selling standards than those in place at the time the actual sales were made.
But on 20th April, the High Court dismissed the application and gave the BBA until tomorrow to lodge an appeal. This morning the association confirmed on its website that it will not be taking the matter any further:
"In the interest of providing certainty for their customers, the banks and the BBA have decided that they do not intend to appeal," the BBA said. "We continue to believe that there are matters of important principle which we will be taking forward in other ways with the authorities."
PPI covers consumers against repayments due on credit products and loans if the consumer cannot afford to pay because of an accident, sickness or death.
The decision opens the way for thousands of PPI complaints that have effectively been put on hold since the legal action began. The FOS says that, since the BBA launched its application in October 2010, the ombudsman has been receiving up to 5,000 new complaints every week.
Many more customers may benefit from the new regime even if they have not complained about their PPI policy. Under the new guidance, if a firm finds evidence of recurrent mis-selling, it should consider whether it should offer redress to customers who have been mis-sold PPI but who have not made a complaint.
Last week, Lloyds Banking Group set aside £3.2bn to pay compensation to customers mis-sold PPI. Earlier today, Barclays said it would be setting aside £1bn for PPI redress. These two figures alone exceed the FSA's estimated compensation bill for the industry of £4bn.