Banks challenge PPI rules

The British Bankers' Association (BBA) wants a high court judicial review of payment protection insurance (PPI) complaints handling by the Financial Services Authority and the Financial Ombudsman Service. The FSA says it will fight the case.

The BBA said: "It has unfortunately been necessary to do this because there is insufficient legal clarity about what the FSA and FOS is proposing in this area. Everyone's actions must be assessed on the basis of a proper understanding of the relevant law and regulation and this procedure will bring this about

"We will continue to explore all opportunities for dialogue with the FSA to resolve the industry’s concerns. No one wants to go to court but the law needs to be clear. We hope to get this resolved as quickly as possible."

FSA to fight

The FSA said: “Since the FSA took on regulation of PPI in 2005 it has taken enforcement action against 24 firms for sales failings.

“The FSA has carried out three thematic reviews, issued warnings, halted the selling of single premium PPI with unsecured personal loans and visited over 200 firms in order to improve the market.

“The FSA strongly believes that the package of new complaint handling measures outlined in policy statement 10/12 is a sensible and fair solution for consumers and the industry alike.

“And that is why the FSA will vigorously contest the BBA's judicial review of the new complaint handling procedures for the PPI market.

Ombudsman

“In the last five years there have been more than a million complaints made to firms about PPI. In 2009/2010 alone, customers referred 49,196 complaints to the Ombudsman, which then upheld nine out of ten in the complainant's favour.