Lloyds Banking Group has withdrawn from challenging the PPI judicial review launched by the British Bankers’ Association against the FSA and FOS.
Lloyds Banking Group have decided to withdraw from challenging the PPI judicial review launched by the British Bankers’ Association against the Financial Services Authority and Financial Ombudsman Service.
The review ruled that the FSA acted lawfully in commanding new rules for complaints handling and redress for PPI.
Lloyds revealed this morning that it has reserved £3.2bn in redress, including administration expenses in expectation that compensation costs will be related to the mis-selling of PPI policies.
A spokesman from Lloyds said: “We will no longer be participating in the BBA’s judicial review. We believe this draws a line under the issue. 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”.
Which? executive director Richard Lloyd says:”This is great news for the millions of Lloyds customers who have been mis-sold PPI. It’s refreshing to see a bank break ranks from its peers and do the right thing by its customers.
An earlier estimation made by Morgan Stanley suggested that PPI compensation may cost banks around £5.1bn.
The BBA instigated its review back in October last year, which disputed the package of PPI redress measures outlined by the FSA in August and guidance on PPI published on the FOS website.
The case was heard in January and last month the High Court ruled in favour of the FSA and FOS. The BBA has until 10th May to appeal against the decision made by the high court.
Despite the loss of its biggest member, the BBA says it is still considering whether it will appeal against the FSA.