Banks have recently been putting PPI (payment protection insurance) complaint claims on hold while a judicial review has been taking place to investigate the FSA legislation. The banks are often citing this as a lawful and legitimate reason not to pay out any compensation, or even take on new claims or continue with existing.
The FSA, however, are warning the heads of the major banks via an open letter that even though the judicial review is taking place, they still need to process and deal with any existing and new PPI compensation complaints. The FSA has advised that only a small number of complaints will be held up due to the judicial review and that the majority of claims can still be dealt with by the banks and must be, or else enforcement action should be taken. The FSA is advising customers with complaints who are unhappy with the responses from their bank should refer their complaint to the Financial Ombudsman Service (FOS). Between 2009 and 2010, over 49,000 complaints by customers were referred to the ombudsman – of which 90% were upheld in the complainants’ favour.
If the judicial review is unsuccessful it could see the banks forced to pay out billions in compensation to people with mis-sold PPI packages.