Banks lose High Court challenge on PPIJudicial review upholds FSA on compensation

20 April 2011

The scales of justice held up

Justice for consumers as High Court backs FSA compensation guidance for mis-sold PPI 

The British Bankers Association (BBA) today lost a High Court judicial review against FSA guidance on Payment Protection Insurance (PPI) mis-selling complaints. Although the BBA is considering an appeal, we hope the judgment will speed up compensation for thousands of mis-sold customers who have had their cases upheld by the Financial Ombudsman Service (FOS), and resolve uncertainly on how far back mis-selling claims can go.     

Which? statement on PPI judgement

Responding to the High Court judgment, Which? chief executive Peter Vicary-Smith said: 'Today’s announcement is a huge victory for consumers. If the banks paid redress to every consumer who had been mis-sold PPI, they’d be looking at a possible £3 billion bill. Instead of dealing with mis-selling, they’re trying to wriggle out of paying up using the courts - this now has to stop.

'The banks need to admit defeat, stop outsourcing their complaints handling to the Ombudsman and finally do the right thing by their customers.

'The sheer volume of PPI complaints the Ombudsman upholds in favour of the consumer proves that consumers should always go to the Ombudsman if their claim is rejected by their bank.'

Financial Ombudsman Service 

The Financial Ombudsman Service said: 'The judgment endorses the approach taken by the ombudsman and the FSA. The banks have 21 days to consider whether to appeal.

'The ombudsman service continues to handle large volumes of PPI complaints from consumers. Since the BBA launched its legal challenge in October 2010, the ombudsman has been receiving up to 5,000 PPI complaints each week.

'This means that the ombudsman service has received over 200,000 complaints in total about mis-sold PPI policies – upholding 3 out of 4 cases in favour of consumers.

'The lack of cooperation from some financial businesses has made it difficult to progress PPI cases since this legal challenge was launched. However, the clear-cut judgment means that banks and other financial businesses should now be in the position to deal promptly, efficiently and fairly with their customers' PPI complaints.'

British Bankers Association reaction to PPI ruling

The British Bankers Association stated: 'We are disappointed with today’s judgment 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 can not be decided will continue to be placed on hold until the next steps have been decided. We will continue to work closely with the FSA to ensure that all complaints are appropriately handled and customers are not disadvantaged. Customers who are considering making a complaint or who have a specific query about an existing complaint should contact their bank in the first instance.'

Claiming compensation for mis-sold PPI 

The FSA has carried out 24 PPI-related enforcement actions against banks and other financial firms since 2005, levying a total of £12.6 million in fines for mis-selling.

If you think you may have been mis-sold PPI and have not yet made a complaint, the Which? online PPI claim tool, is the quick and easy way to reclaim PPI you have been mis-sold.