Britain's banks have lost their court case against the Financial Services Authority over how complaints about payment protection insurance (PPI) should be handled. This now paves the way for compensation payouts to millions of customers who have been mis-sold a PPI product.
Today's Judicial Review determined that the banks must continue to accept compensation claims from customers who were sold the policy before new rules were introduced at the end of last year.
The FSA said in a statement: '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 BBA, representing the banks, are considering their position and made this statement: '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,'
Many of the big high street banks had refused to handle PPI complaints until the High Court made its decision - despite an order from the FSA not to delay dealing with complaints.
The Financial Services Authority has warned banks not to use their Judicial Review challenge as an excuse to delay processing PPI complaints.
Since the BBA began judicial review proceedings in October last year, the FSA believes that some banks have placed on hold ‘nearly all' of their PPI complaints, with the review given as the reason for the delay. Failure to progress complaints, the regulator warned, could represent a breach of responsibilities under the complaints handling rules.
A spokesperson for the FSA has explained that ‘Only a small number of complaints will be tied up because of the judicial review. The vast majority can still be dealt with and failure to do so could lead to enforcement action.'
Once again, Lloyds Banking Group has topped the complaints table, attracting 22,242 complaints to the ombudsman in just six months. The Lloyds Banking Group attracted almost twice as many complaints as the next highest company, Barclays.
Figures published today show that the banking group, which includes the Lloyds TSB, Halifax, Bank of Scotland and Black Horse brands, pulled in a total of 22,242 complaints in the first half of 2010, compared with 20,190 in the second half of last year.
Lloyds TSB Bank attracted nearly twice as many complaints as the next company in the tables. Barclays Bank came second in the table for the second six months running, with 7,991 complaints, of which 4,797 related to banking and credit and 2,205 to general insurance.
The financial ombudsman upheld 61% of the complaints against Barclays.
The ombudsman service received a total of 84,212 new complaints between 1 January and 30 June, a small increase on the 82,136 cases received in the second half of 2009, and a large proportion of which related to the sale of payment protection insurance. The majority of these complaints, which were included in the figures for general insurance, were upheld, including 96% of general insurance complaints against Black Horse, 95% against Barclays, 93% against Welcome Financial Services and 86% of those against Lloyds TSB.
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