BBA loses judicial review on PPI complaints

The British Bankers’ Association has lost the judicial review against the FSA and FOS over PPI complaints.

The British Bankers’ Association has lost the judicial review against the FSA and FOS over PPI complaints.

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 banks have 21 days to consider whether to appeal the judgement.

The FSA says firms now have a duty to assess every complaint relating to PPI before deferring cases in light of today’s judicial review ruling.

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.”

The BBA has said the processing of PPI complaints will still be on hold until the banks have decided what action they wish to take in light of the ruling.

In its response to the ruling 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 cannot be decided will continue to be placed on hold until the next steps have been decided.”

The BBA launched a judicial review against the FSA and the FOS at the High Court in London in October.

The move followed a policy statement published by the FSA in August outlining a package of measures to protect consumers buying PPI. The measures included guidance to ensure complaints are handled properly, an explanation of when firms should analyse past complaints, and an open letter setting out common sales failings.

Firms were supposed to implement the measures by December 1.

The FOS says since the BBA launched its legal challenge in October 2010, the ombudsman has been receiving up to 5,000 PPI cases each week.

FOS chief ombudsman Natalie Ceeney says: “This judgement is very clear-cut – and it confirms that the ombudsman’s approach to PPI complaints is right. People have been waiting a long time while the banks’ legal action has been ongoing. I would now like to see financial businesses showing real commitment to sorting out their customers’ complaints efficiently and promptly.”

The FSA says: “We believe this decision signals the end of years of poor complaint handling and will trigger a dramatic improvement in the way customers are treated when complaining.

“The FSA has not put a waiver in place so firms must continue to deal with complaints where possible, including letting customers know they can refer their complaint to the ombudsman if they are unable to progress it. Failure to do so may result in enforcement action.”

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