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Banking industry gives up on PPI mis-selling battle Banking industry gives up on PPI mis-selling battle
(40 minutes later)
The banking industry has abandoned a legal fight over the mis-selling of payment protection insurance (PPI).The banking industry has abandoned a legal fight over the mis-selling of payment protection insurance (PPI).
The British Bankers' Association, which fought the case, said it would not appeal after losing a court challenge against new rules on mis-selling.The British Bankers' Association, which fought the case, said it would not appeal after losing a court challenge against new rules on mis-selling.
Barclays Bank said it had set aside £1bn to pay compensation, HSBC £269m, while RBS said it too would not contest the court ruling.Barclays Bank said it had set aside £1bn to pay compensation, HSBC £269m, while RBS said it too would not contest the court ruling.
Last week, Lloyds Banking Group made a £3.2bn provision for possible claims.Last week, Lloyds Banking Group made a £3.2bn provision for possible claims.
The decisions mean that several milion people may now be eligible for a compensation payment. Peter Vicary-Smith of the consumers' association Which? said the banks had now seen sense.
"It was a colossal error of judgment by the BBA to have brought this case in the first place, which has even further diminished the banking industry's reputation in the eyes of consumers," he said.
"PPI was mis-sold and complaints about it mishandled on an industrial scale for well over a decade.
"There could still be huge numbers of people out there who were duped into buying PPI and unaware they can make a claim," Mr Vicary-Smith added.
Mis-sold
The banks' decisions mean that several million people may now be eligible for a compensation payment.
PPI policies are supposed to cover loan repayments if someone falls ill, has an accident or loses their job.PPI policies are supposed to cover loan repayments if someone falls ill, has an accident or loses their job.
But many of the policies were mis-sold.But many of the policies were mis-sold.
In some cases they were sold to self-employed people who would not have been able to claim, to borrowers who were wrongly told that taking PPI was a condition for being granted their loan, and even to consumers who did not realise they were taking out a policy.In some cases they were sold to self-employed people who would not have been able to claim, to borrowers who were wrongly told that taking PPI was a condition for being granted their loan, and even to consumers who did not realise they were taking out a policy.
Last month the High Court ruled that the banks had to obey the new rules of the Financial Services Authority (FSA), which require them to go back over all their past sales to see if the customers have a claim for mis-selling.Last month the High Court ruled that the banks had to obey the new rules of the Financial Services Authority (FSA), which require them to go back over all their past sales to see if the customers have a claim for mis-selling.
'Important step''Important step'
In a statement the BBA said: "In the interest of providing certainty for their customers, the banks and the British Bankers' Association have decided that they do not intend to appeal."In a statement the BBA said: "In the interest of providing certainty for their customers, the banks and the British Bankers' Association have decided that they do not intend to appeal."
Royal Bank of Scotland confirmed on Monday that it would also be addressing customers' complaints, but said it had yet to decide how much to set aside for possible claims.Royal Bank of Scotland confirmed on Monday that it would also be addressing customers' complaints, but said it had yet to decide how much to set aside for possible claims.
RBS said in a statement: "We are already in discussions with the FSA to clarify its requirements and the implications for our customers and shareholders. "We are already in discussions with the FSA to clarify its requirements and the implications for our customers and shareholders," the bank said.
"This is an important step for all UK banks in our efforts to restore the confidence and trust of consumers," it said. Adam Scorer, of Consumer Focus said the banks should ensure users received their money "quickly and efficiently."
"The entire episode is an embarrassment for our High Street banks - it is now time to wipe the slate clean, pay up and look to learn lessons for the future," he said.
"Refunding billions of pounds to millions of people will be a mammoth undertaking and to get it wrong would add insult to injury."
'We apologise''We apologise'
Barclays chief executive Bob Diamond said the bank would now begin the process of compensating customers. Barclays' chief executive Bob Diamond said the bank would now begin the process of compensating customers.
The big banks should have been more mindful of...paying due regard to the interests of customers and treating them fairly.
"We don't always get things right: when we get them wrong, we apologise and put them right."We don't always get things right: when we get them wrong, we apologise and put them right.
"We have taken this decision because it is in the best interests of our customers, as well as for Barclays and its shareholders. Creating certainty, particularly regarding past issues, is of benefit to all parties," Mr Diamond said. "We have taken this decision because it is in the best interests of our customers, as well as for Barclays and its shareholders," Mr Diamond said.
The Financial Ombudsman Service welcomed the banks' decision to deal with the mis-selling.The Financial Ombudsman Service welcomed the banks' decision to deal with the mis-selling.
"It's very good news that the banks will not be appealing the High Court's clear-cut judgment, which endorsed the ombudsman and FSA's approach to PPI complaints," said chief ombudsman Natalie Ceeney."It's very good news that the banks will not be appealing the High Court's clear-cut judgment, which endorsed the ombudsman and FSA's approach to PPI complaints," said chief ombudsman Natalie Ceeney.
"Consumers should come to us at the ombudsman if they're unsure about what to do next. Meanwhile we will be working with the banks, over the coming weeks, to ensure that consumers' complaints are dealt with fairly and promptly.""Consumers should come to us at the ombudsman if they're unsure about what to do next. Meanwhile we will be working with the banks, over the coming weeks, to ensure that consumers' complaints are dealt with fairly and promptly."
The Financial Services Authority has estimated that banks will have to pay up to £4.5bn to settle the thousands of claims.The Financial Services Authority has estimated that banks will have to pay up to £4.5bn to settle the thousands of claims.
Have you been mis-sold a PPI policy? Send us your comments using the form below:Have you been mis-sold a PPI policy? Send us your comments using the form below: