Banking companies are Purposely Delaying PPI Claims

Hundreds of thousand of ppi claims from loan insurance will be placed on hold for many months until legal battle is finished. The British Bankers’ Association has declared that banks will postpone the old ppi claims relating to the sale of payment protection insurance (PPI). The cases will be dealt only once the conclusion of a judicial review has carried out. The Financial Ombudsman Service (FOS) has revealed that ppi claims topped the list of issues within the last financial year.

In August 2010, the Financial Services Authority (FSA) announced a crackdown on the way banks as well as other financial firms have been working with complaints about the mis-sold ppi policies. The City watchdogs required that banks as well as other lenders will have to review old complaints about ppi claims and other ppi related issues. It ordered to follow fresh guidelines that were enforced on December 1.
The FSA expects its brand new rules to force financial services industry to manage 2.75 million ppi claims and ppi associated cases and claimants could be refunded as much as ï¿¡2.7bn. However, the British Bankers’ Association (BBA), which usually represents the High Street banks, called the new rules illegal and retrospective by applying new standards to their old sales. It announced recently that it was seeking a judicial review.

The BBA then has said that any case which may be affected by the result of the said judicial review which might not be heard in the High Court until earlier this year will be placed on hold. The BBA said in its statement that the evaluation of the complaint will never be affected by the judicial review and these complaints will be handled in a normal way. However, if the complaint will be impacted by the judicial review, and cannot be resolved at this time, then banks will write to inform their customers.

FSA’s rules allowed these cases to be put on hold until the case was over. There also been no application for a waiver similar to the official hold on cases put in place during the past legal arguments over unauthorized bank charges. However, this move will probably add an extra element to the dispute, with the FSA saying that firms will be expected to continue handling ppi claims as well as other complaints while this process is ongoing. Also, complainants would still be eligible for take their cases to the Financial Ombudsman Office if the bank has not dealt with it within eight weeks of the initial complaint, even if the case is on hold.
The banks assume that FSA is acting beyond its powers in ordering them to offer compensation to their customers for past mis-selling under its general rules referred to as Principles of Business Sourcebook.