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‘Members wanted legal clarity’

The British Bankers’ Association has defended its decision to bring the judicial review over payment protection insurance complaint measures, saying its members asked for legal clarity.

Last October, the BBA launched a judicial review challenging the legality of the package of measures that the FSA outlined in August to overhaul the way PPI complaints are dealt with.

The trade body argued that current rules were being applied retrospectively and also criticised guidance published on the Financial Omb-udsman Service’s website based on the FSA’s rules.

The case was heard at the High Court in January and in April the court found in favour of the regulator and the FOS.

The BBA had until May 10 to lodge an appeal but following the withdrawal of support from Lloyds Banking Group and Barclays, the trade body decided not to do so.

A spokesman for the BBA says: “The issue of the PPI package of measures was raised by the banks in one of our regular committee meetings. They signalled to us that they wanted some legal clarity on this and asked us to take it forward on their behalf. The banks themselves then decided the direction they wanted to go in.”

The BBA will continue to pursue the issue of retrospective regulation with the FSA.

Evolve Financial Planning director Jason Witcombe says: “The banks know in their heart of hearts whether they have done the wrong thing by their clients or not and now they need to draw a line under it. The PPI scandal has been a complete shambles and has not done the banks any favours.”

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  1. anthony brennan 19th May 2011 at 6:15 am

    It should be noted that 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. The strategy of the banks will now be to make large provisions (with the intention of releasing them in later financial years) and dispute claims on the basis that their customer’s claims were not correctly drafted.

    http://www.blog.bank-charges-recovery.co.uk/

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