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BBA drops its FOS action as support is withdrawn

The British Bankers’ Association was forced to drop its judicial review against the FSA and Financial Ombudsman Service over payment protection insurance complaint measures after Lloyds and Barclays withdrew their support.

The BBA had until May 10 to lodge an appeal. The trade body launched the legal proceedings last October, challenging the legality of PPI redress measures. The case was heard in January and in April the High Court found in favour of the FSA and FOS.

Lloyds Banking Group was the first bank to withdraw its support for the judicial review last week after announcing a £3.2bn provision for PPI redress.

A spokesman says: “We have always said that we wanted to provide certainty for our customers.

“Drawing a line under this issue does exactly that and is also in the interests of the long-term stability of our business.”

This week, Barclays also abandoned the fight and set aside £1bn for PPI redress.

Barclays chief executive Bob Diamond says: “We do not always get things right for our customers. When we get them wrong, we apologise and put them right.
“That is our commitment to our customers and it applies to the way in which we will deal with PPI complaints.”

HSBC has also set aside £269m to cover PPI compensation costs.

A spokesman for Royal Bank of Scotland, which was also a significant PPI player, says: “We welcome the BBA’s decision, which enables us to resolve this matter in the best interests of custo-mers. We will update our customers and shareholders on the steps we agree with the FSA, the likely timeframe and the anticipated costs of redress.”

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