This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/business-13128692
The article has changed 8 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| UK banks lose payment protection insurance challenge | |
| (about 1 hour later) | |
| UK banks have lost a judicial review that could have a major impact on whether more compensation has to be paid on mis-sold loan insurance. | |
| The banks challenged the Financial Services Authority (FSA) over guidelines suggesting retrospective compensation for the mis-selling of Payment Protection Insurance (PPI). | |
| These updated guidelines mean banks have to review all past sales. | |
| These have now been upheld by a High Court judge. | |
| The ruling should set a standard by which compensation claims are judged. | The ruling should set a standard by which compensation claims are judged. |
| However, the British Bankers' Association, which said it was "disappointed" by the ruling, has 21 days to appeal against the High Court ruling. | |
| It said some compensation cases would remain on hold until it had decided whether to continue its challenge in the courts. | |
| Rules | Rules |
| PPI policies are supposed to repay people's loans if their income drops because they fall ill or lose their jobs. | PPI policies are supposed to repay people's loans if their income drops because they fall ill or lose their jobs. |
| Some proved appropriate but the banking industry has been accused of mis-selling them on a huge scale, generating many millions of pounds in profits by selling insurance that people were unaware they were paying for or did not need, or on which they could not claim. | Some proved appropriate but the banking industry has been accused of mis-selling them on a huge scale, generating many millions of pounds in profits by selling insurance that people were unaware they were paying for or did not need, or on which they could not claim. |
| Natalie Ceeney, the chief financial ombudsman, said: "This judgment is very clear-cut - and it confirms that the ombudsman's approach to PPI complaints is right. | |
| "People have been waiting a long time while the banks' legal action has been ongoing. I would now like to see financial businesses showing real commitment to sorting out their customers' complaints efficiently and promptly." | |
| The judicial review, which started at the end of January, referred to new FSA rules that require firms to review past sales. | |
| During the hearings, the court was told that implementation of the new guidelines could cost the banks and credit card companies as much as £4.5bn, paid to hundreds of thousands of people. | |
| The rules said that banks would have to review past PPI sales, even where customers had so far not complained. | |
| Customers would have to be repaid their PPI premiums, plus interest, if the bank or other firm concluded that the customer would not have bought the policy in the first place if they had been fully aware of the policy's details. | Customers would have to be repaid their PPI premiums, plus interest, if the bank or other firm concluded that the customer would not have bought the policy in the first place if they had been fully aware of the policy's details. |
| A similar reimbursement could be due to those customers that paid for a policy in full up front. | A similar reimbursement could be due to those customers that paid for a policy in full up front. |
| Compensation | Compensation |
| The UK's banks, represented by the British Bankers' Association (BBA), challenged the FSA's new requirements. | |
| They argued that the FSA was effectively applying new rules to previous sales - even when those sales were regulated by other FSA rules. | They argued that the FSA was effectively applying new rules to previous sales - even when those sales were regulated by other FSA rules. |
| One side effect of this dispute is that thousands of fresh complaints have been put on hold since last October, when the BBA first announced it would launch its legal action. | One side effect of this dispute is that thousands of fresh complaints have been put on hold since last October, when the BBA first announced it would launch its legal action. |
| The Financial Ombudsman Service said there should no longer be any stalling over these cases. | |
| There were more than 200,000 cases referred to the Financial Ombudsman Service about PPI in recent years, including 100,000 in the last financial year and now 5,000 each week. About three in four complaints have been upheld in the past. | |
| Complainants included people such as Gary Thomas, from London. | Complainants included people such as Gary Thomas, from London. |
| "I was sold a PPI policy - it amounts to 25% of the cost of the loan covering me for a five year period. In total it cost me £20,000 over a five-year period on a £60,000 loan," he said. | "I was sold a PPI policy - it amounts to 25% of the cost of the loan covering me for a five year period. In total it cost me £20,000 over a five-year period on a £60,000 loan," he said. |
| "I feel I was misled by this company and asked the ombudsman to look into it. It is nothing short of theft. They should be stopped from selling the insurance." | "I feel I was misled by this company and asked the ombudsman to look into it. It is nothing short of theft. They should be stopped from selling the insurance." |
| Were you mis-sold a PPI policy? Are you waiting for the court's ruling on the issue? Send us your comments and experiences using the form below. | Were you mis-sold a PPI policy? Are you waiting for the court's ruling on the issue? Send us your comments and experiences using the form below. |