The British Bankers’ Association (BBA) have just lost a judicial review to stop more compensation payouts of mis-sold PPI claims.
The BBA had challenged the Financial Services Authority (FSA) over new guidelines that it published last year stating that banks should contact all past customers who were sold PPI for loans and invite them to complain if they thought they had been mis-sold the loan repayment insurance. But today the high court has rejected this challenge in favour of the Financial Ombudsman Service.
The decision is likely to cost the banks and credit card companies up to £4.5bn – repaying customers who request compensation for the mis-sold PPI, including any interest earned on the premiums. Currently, the BBA is reviewing the decision, and whether or not to appeal – which they have up to 21 days to do so. The BBA has advised banks are still going to put new cases of PPI complaints on hold until a decision on an appeal is reached.
The FSA has advised there have been 1.5 million complaints about PPI since 2005. They believe this decision should rule the end of poor handling of complaints by the banks, and trigger a dramatic improvement in the way people are treated in the future.