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-13330858

The article has changed 10 times. There is an RSS feed of changes available.

Version 6 Version 7
Banking industry gives up on PPI mis-selling battle Banking industry gives up on PPI mis-selling battle
(about 3 hours 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.
Peter Vicary-Smith of the consumers' association Which? said the banks had now seen sense.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."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."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."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-soldMis-sold
The banks' decisions mean that several million people may now be eligible for a compensation payment.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 16 million have been sold since 2005 alone and many are thought to have been mis-sold.But 16 million have been sold since 2005 alone and many are thought to have been 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.
"We are already in discussions with the FSA to clarify its requirements and the implications for our customers and shareholders," the bank said."We are already in discussions with the FSA to clarify its requirements and the implications for our customers and shareholders," the bank said.
Adam Scorer, of Consumer Focus said the banks should ensure users received their money "quickly and efficiently."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."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.""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.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," 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 (FOS) 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. "Consumers should come to us at the ombudsman if they're unsure about what to do next," 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." "Meanwhile we will be working with the banks, over the coming weeks, to ensure that consumers' complaints are dealt with fairly and promptly."
Better record
One leading mortgage lender, the Nationwide building society, distanced itself from the banks that tried to challenge the FSA.
It said it had continued to process new PPI complaints while the High Court case was being heard.
It pointed out it expected to pay only £10m in compensation and had a much better record of dealing with such complaints.
"Looking at the FOS complaints league table (for the second half of 2010) the society is ranked 102 out of 106 firms based on fewer than 650 complaints," said a spokesman for the society.
"Thirteen per cent of the society's complaints were upheld by FOS in favour of the customer, compared to an industry average of 63%."
FSA scrutinyFSA scrutiny
The FSA has previously estimated that the banks will have to pay up to £4.5bn to settle tens of thousands of claims.The FSA has previously estimated that the banks will have to pay up to £4.5bn to settle tens of thousands of claims.
That now appears to be an underestimate.That now appears to be an underestimate.
The regulator requires the banks to look at all past sales of PPI policies and, if there is any evidence of mis-selling, to write to the affected customers and invite them to make a claim. The regulator requires the banks and other PPI sellers to look at all past sales and, if there is any evidence of "systemic" mis-selling, to write to the affected groups of customers and invite them to make a claim.
This means that not all past customers will be contacted directly, as not all policies were mis-sold in the first place.This means that not all past customers will be contacted directly, as not all policies were mis-sold in the first place.
However, any customer who has a concern is encouraged to lodge a complaint first rather than wait for the bank to take the initiative.However, any customer who has a concern is encouraged to lodge a complaint first rather than wait for the bank to take the initiative.
An FSA spokesman explained that the regulator employs teams of supervisors for each individual institution, and also has a special team looking at just the PPI problem, which would ensure that the banks and other sellers of PPI did not dodge their responsibilities.An FSA spokesman explained that the regulator employs teams of supervisors for each individual institution, and also has a special team looking at just the PPI problem, which would ensure that the banks and other sellers of PPI did not dodge their responsibilities.
Although the FSA can only enforce its rules on sales made after January 2005, when it took over regulation of PPI sales, customers can still complain to a bank about sales before then.Although the FSA can only enforce its rules on sales made after January 2005, when it took over regulation of PPI sales, customers can still complain to a bank about sales before then.
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: