Banks have to review every PPI complaint
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The FSA says firms have a duty to assess every complaint relating to payment protection insurance before deferring cases in light of today’s judicial review ruling.
Mr Justice Ouseley ruled at the Royal Courts of Justice in London this morning in favour of the FSA and the Financial Ombudsman Service in a judicial review over PPI measures brought by the British Bankers’ Association in October.
Following the hearing in January, the High Court ruled today that the FSA was right to impose a package of redress measures on firms who have sold PPI, which could cost firms up to £3.2bn.
The FSA handbook requires firms handling complaints to issue a written response within eight weeks of the complaint being made with either a final decision or a written explanation of why a final decision cannot be provided. In the case of the latter, firms have to make customers aware of their right to take their complaint to the Financial Ombudsman Service.
An FSA spokesman says: “We are aware that firms are not dealing with complaints. What firms need to do is look at every single complaint and then decide whether they can deal with it.
“If they decide they cannot take it forward for whatever reason, including the ongoing review, we understand that. But where they can deal with complaints without reference to what is being challenged in court, then we expect firms to take the complaint forward and deal with it.”
In response to the ruling earlier, the FSA said that failure to deal with complaints could lead to enforcement.
In its response the BBA said: “We are disappointed with today’s judgement and now need to consider the details of it very carefully as well as next steps, including whether it would be appropriate to apply for permission to appeal.
“Any complaints that are directly affected by the judicial review and therefore can not be decided will continue to be placed on hold until the next steps have been decided.”
The BBA has 21 days to decide whether it wants to appeal the judgement or not.
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Readers' comments (3)
PensionMan | 20 Apr 2011 2:17 pm
"The BBA has 21 days to decide whether it wants to appeal the judgement or not."
Of course they are going to appeal this. Think back to the unfair overdraft fee fiasco.
They have friends in very high places and I would be very suprised if they do not get this overturned.
I really, really hope that doesnt happen though!
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John Hutton | 20 Apr 2011 2:20 pm
It should not be every complaint that is investigated properly it should be every policy to make sure that it was suitable and fit for purpose.
If not then every penny of premiums paid should be repaid to the policyholder + interest.
It is time that these organisations actually went back to the principals of actually looking after a customers interests and not what is the bottom (or as is the case here the "top") line for their profit.
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Anthony Brennan | 20 Apr 2011 2:49 pm
We have dealt with clients in wheelchairs that have been sold sickness insurance that could never been claimed on due to obvious health issues. We have dealt with policies sold to pensioners, housewives and students who could never claim on loss of employment as they were never employed. We have dealt with Russian Builders, Indian Cooks and African Taxi Drivers who could hardly speak English and could never claim as they were self employed. We have dealt with Nurses working for the NHS, civil servants, policeman, firemen and armed forces personnel who could never claim on policies due to the fact that they were fully covered from their work sickness insurance.
The banks who sold these policies had a massive incentive to sell them due to the enormous commissions involved (usually 60% of the total cost of the policy). In addition on single premium loans they not only gained the loan commission they also lent the money to purchase the policy in the first place. So that on lending £5,000 to purchase a policy at say interest of 20% pa with 60% of the cost of the policy refunded as commission they bank effectively earned 50% interest on the net cost of the loan.
The banks have ignored their own regulators guidelines to refund this money. They have challenged the regulators instructions on best practice and lost in court and now there is no doubt they will appeal this judgement in the cynical knowledge that by delaying the verdict another 18 months they will save hundreds of millions of pounds in people giving up on their claim and the fact that they are able to destroy their financial records older than 6 years old thus preventing claims on their older policies
http://www.blog.bank-charges-recovery.co.uk/
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