Banks' £3bn bill for PPI
Banks will be forced to pay up to £3 billion compensation over the mis-selling of payment protection insurance after a High Court judge today rejected a challenge from the British Bankers' Association against an earlier ruling.
The banking trade body had argued against new regulations brought in to control the selling of PPI, which guards against missed repayments
on credit cards, loans and mortgages in the event of accident, illness or unemployment.
Last year, after a stream of customer complaints over PPI, including some who weren't even aware they had been signed up to the policies, the Financial Services Authority introduced rules to stop mis-selling, including making it clear cover is optional. But the BBA launched a High Court challenge against the FSA, claiming its rules were unfair because they would be applied retrospectively.
The judicial review today ruled against that case, saying the banks must accept compensation claims from customers who were sold PPI policies before the new rules were introduced at the end of last year.
The FSA said it "signalled the end of years of poor complaint handling and will trigger a dramatic improvement in the way customers are treated".
Oliver Morgans, financial services expert at Consumer Focus, said PPI represented "everything that is wrong with the banking sector".
He said: "This is a huge win for millions of people. It has taken years of the banks being dragged kicking and screaming, but they are finally being forced to do the right thing by their customers."
