Judicial Review Over, FSCS Targets Insurers and Banks Recoup Losses

Millions of people are now due to receive up to £9 billion in compensation as the banks decided to surrender their option to appeal Judge Ouseley's High Court decision against them. This means that all the banks must now adopt the provisions in the FSA's Policy Statement and begin reviewing cases and paying out compensation to customers.

The BBA released a statement yesterday confirming they didnt intend to appeal the Judicial Review. As a consequence, there has been some significant coverage in the press concerning the banks liability for PPI complaints. Lloyds TSB, by far, has the largest liability, suggesting it will need to pay around £3.2 billion in compensation to aggrieved customers with RBS at £850 million, HSBC at £270 million and Barclays at £1 billion.

Just how the banks intend to clear the huge backlog of claims is yet to be announced, but we are beginning to see some cases with FOS being upheld in the customer's favour already. The advice is to ensure you make your claim without delay!

In other news, the FSCS has suggested it intends to pursue insurers involved in the mis-selling of payment protection insurance. Historically, cases have always been dealt with against the party who provided the advice to take out the insurance policy. But the FSCS would like to begin scoping out the possibility of approaching insurers directly as they attempt to establish a common law duty that the seller of the policy was an agent of the insurer.

This will assist smaller IFAs and intermediaries by putting a percentage of the FSCS levy onto the shoulders of the big insurance companies. The idea has similar connotations to the Keydata saga between the FSCS and Norwich and Peterborough Building Society.

We have always agreed that some of the burden (especially loans sold by non-GISC members pre-05) be analysed for potential liability against the insurer and hope this will go some way to allow this to happen.

Following on from a recent article, there has been renewed analysis concerning how the banks intend to recoup losses from PPI compensation. It therefore has come as no shock to see credit card companies are charging the highest rates for 13 years. These stealth increases across the banking sector are fuelling the huge deficit made by the ban of PPI and subsequent funds to compensate customers. However, at least the fees and charges are becoming clearer. For example, customers may feel happier paying a monthly account charge for clear benefits rather than funding an unnecessary insurance policy. Im sure the banks will continue to find new ways to make money as time passes.

If you think you have been mis-sold PPI, please get in touch with us at www.ppireturn.co.uk