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BBA will not appeal PPI judicial review

The British Bankers’ Association will not be appealing the High Court’s decision rejecting the BBA’s call for a judicial review of payment protection insurance complaint measures set out by the FSA and the Financial Ombudsman Service.

It follows recent news that Lloyds Banking Group and Barclays would not have lent their support backing any appeal.

The BBA had until tomorrow to lodge an appeal with the High Court.

The BBA says: “The BBA on behalf of its members judicially reviewed the FSA and the FOS regarding the retrospective elements in the proposed FSA rules for handling PPI complaints. The judgment was handed down on April 20 and found in favour of FSA and the FOS. The BBA was given until May 10 to appeal.

“In the interest of providing certainty for their customers, the banks and the BBA have decided that they do not intend to appeal. We continue to believe that there are matters of important principle which we will be taking forward in other ways with the authorities.”

The BBA launched its judicial review in October, challenging the FSA’s PPI redress measures set out in a policy statement in August which called for an overhaul in the way firms deal with PPI complaints.

The trade body argued the measures were based on principles that are not actionable in law.

The case was heard by the High Court in January, and in April the court ruled in favour of the FSA and the FOS.

Lloyds has made a £3.2bn provision to cover the cost of PPI-related compensation and associated admin costs. The announcement by Lloyds was widely hailed by consumer groups as a victory for consumers who had been mis-sold PPI.

Barclays announced this morning that it would be setting aside £1bn for PPI redress.


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. The claim to be acting in customers’ best interests is a cynical attempt to save face in the retreat from yet another misselling scandal perpetrated by the bankers – had they been so concerned about customers’ interests in the first place they would not have been in this position.

  2. John Blackmore 9th May 2011 at 9:11 am

    I have no love for the Banks but have to say that it is a bad day for all.

    My understanding is that what the banks did was legal at the time ? and the courts have decided that it is quite acceptable to make retrospective judgments, to rely on TCF and principles ? The law of contract is no longer to apply.

    Sad that the banks have given in so easily but understandable. They will simply pass on the cost to their customers – well done Regulators.

  3. Legal my foot. This case was always doubtful from a legal perspective. Besides having personally experienced the way these policies were sold and the way they were arranged for our clients Banks broke all the rules we (and they) were operating under back then. Failing to assess needs and suitability, misleading claims, failure to disclose. And then the bullying – one Lloyds employee was rude and objectionable as they realised their commission was going.
    The real trouble is that nothing has changed over the years. Banks are still pressurising staff to make a sale in 1 one hour, to meet product targets regardless of a client needs. And what about these guaranteeed products they have recently sold?
    Yes, the banks will find a way to recover these lost profits in increased charges but what is wrong with that provided it is clear and transparent and the Government and FSA do not lose their nerve and regulate strongly?

  4. I have to echo Sam Caunt. It was never legal to say that obtaining the loan was dependent on taking the insurance. While I am sure the banks would deny this happened not only was it almost always implied, most of the time it was explicitly spelt out. The banks target structure was to blame so this went right to the top, to the most senior management.

  5. “In the interest of providing certainty for their customers, the banks and the BBA have decided that they do not intend to appeal. We continue to believe that there are matters of important principle which we will be taking forward in other ways with the authorities.”

    In other words, “On second thoughts we know we will get a kicking in the appeal, so we’ve decided to salvage what we can and hope the public is gullible enough to believe our latest p.r. In the meantime, we’ll carry on as before with sales targets regardless of appropriateness and hope no-one notices.”

  6. retrospectively challenging the laws of the time is a very dodgy thing to be doing, and could open up a whole plethora of other challenges.

  7. @sam Caunt – Whilst I agree we know the staff were doing the wrong thing (due to sales target pressure), what the banks SAID they were doing was legitimate and I am concerned they have been measured on the former without the evidence being displayed.
    It is important not to loose sight of who is agent of who. If this was people acting as agents of their clients or claiming to do so (IFAs or independant mortgage brokers)and although there is (according to the FSA) no such thing as Independant Advice when if comes to general insurance (which this is). If Sam or I (as we hold ourselves out as being agents of our clients) and hence cannot make an undisclosed commission and we say we provide advice, we don’t even need the FSA’s stupid rules to know that we have broken the law (agency law) If however we are representatives of our employer (bank or insuer) and do not claim to be the agent fo the client, nor to be giving advice, but simpl informaiton for the customer (note I say customer and not client as there is a difference), then whilst what the banks do is immoral, it is not illegal, nor was it against FSA rules at the time. This is politics playing to the masses and whilst I might gloat at the banks being hit with these fines (as they are morally corrupt) and them withdrawing their fight, this is not good for anyone as it is anarachy….

  8. anthony brennan 11th May 2011 at 6:00 am

    It should be noted that the BBA V FSA Judicial review was not about PPI claims. The dispute was about a set of best practises that the FSA introduced in December 2010 and whether they could be applied retrospectively. The instructions from the FSA were that banks should justify why they had sold PPI and if they could not created the obligation to inform their customer of a “potential claim”.

    For the customer to recover this money they still need to establish a basis of claim ie on what legal grounds they believe they should receive their money back, they need to establish the type of claim ie termination or rescission of the PPI contract and quantify their claim.

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