Critics hit out at BBA over more delays in PPI mis-selling scandal

The organisation that represents British banks has refused to rule out appealing against a landmark High Court decision that has paved the way for millions of people to claim compensation over mis-sold payment protection insurance.

The British Bankers’ Association had argued that customers should not be entitled to retrospective compensation after new rules on mis-selling were introduced last year. It warned it could cause harm to the industry to the tune of £4.5billion in compensation to customers.

But judges ruled in favour of consumers, saying the new regulations on mis-selling PPI could be applied retrospectively.

However, the BBA’s decision to examine the details of the judgement and to refuse to rule out an appeal means that cases will be put on hold. ‘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,’ it said in a statement.

‘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,’ it added.

But consumer champions hit out at the BBA. ‘This is a huge victory for consumers,’ he said and urged the BBA to ‘admit defeat, stop outsourcing their complaints handling to the Ombudsman and finally do the right thing by their customers’.

Many people who took out PPI would not even have known they were doing so or were unaware of its costs. Some would have been sold it aggressively on the phone or failed to tick a box on a form to opt out of it where it is automatically bundled in with the loan.

More than 1.5million policyholders have already complained, typically receiving compensation of £2,750. Yesterday’s judgment potentially opens the floodgates for millions of other victims who have not complained to get compensation.

Kevin Mountford, head of banking at moneysupermarket.com, said that thousands of potential claimants who had PPI on loans or cards in the past could now come forward. ‘Up until the ruling many banks have refused to deal with PPI claims until a decision was made, clearly hoping that they would win their case and the PPI cases would not need to be reviewed,’ he explained.

‘We have seen many cases over recent years where some consumers have been sold completely unsuitable products that were unworkable for them because of pre-existing conditions for example, or because they were self employed,’ he added.

The Financial Services Consumer Panel said it is concerned that the judgement is likely to be only the first instalment of a process of litigation which may take months to resolve. It has previously called on banks to admit responsibility and settle any outstanding mis-selling cases without further delay.
    
‘It would be very disappointing indeed if today's litigation marked the beginning of a long drawn out legal dispute.  It is time for the banks to stop hiding behind expensive lawyers and to finally give consumers the redress they deserve,’ it said.

Oliver Morgans, financial services expert at Consumer Focus, said: ‘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. PPI is a clear example of everything that is wrong with the banking sector. It shouldn't need the intervention of a High Court to ensure that bank customers are treated fairly. When 200,000 people complain to the Ombudsman and three quarters of complaints are upheld, something is clearly very wrong,’ he explained.

‘Moving forward, the new regulator needs to learn the lessons of PPI and be given the powers to root out bad products and practices at an early stage. Mis-selling on this scale must never be able to happen again,’ he added.