Payment Protection Claims
Banks place Payment Protection Claims on hold as high court review continues.
Many banks are defying Financial Service Authority (FSA) regulations and placing Payment Protection Claims on hold pending a high court review of new guidelines. This is just the latest chapter in a long running battle over the sale of payment protection insurance policies that began in 2006.
Payment protection insurance is commonly sold by banks and other lenders alongside loans, mortgages and credit cards and is meant to protect the customer from forfeiting their loan in the event they are unable to work due to illness or unemployment. In 2006 The FSA exposed huge failings in the PPI market, though, revealing the policies were often seen as an easy revenue stream by the banks and were frequently mis-sold. Their investigation revealed policies were commonly sold to people who did not need them or who were unsuitable due to their circumstances. As a result of the FSA's revelations payment protection claims have risen significantly.
In an attempt to prevent mis-selling in the future the FSA announced a set of new guidelines, due to come into force in December 2010, and it is these guidelines that have prompted the high court review. The guidelines include a requirement that the main elements of the ppi policy be explained to the customer and that a document be produced confirming the customer is aware the policy is optional. The British Banking Association requested the review as they believe it is unfair the new guidelines can be applied retrospectively. This would mean past sales would be evaluated against the new guidelines instead of the guidelines that existed at the time of sale. If the new guidelines are allowed to go ahead, as planned, it would have a significant impact on payment protection claims.
Although the review is pending, the banks are breaking with existing FSA guidelines by putting claims on hold. Their decision does not prevent unhappy customers referring complaints to The Financial Ombudsman who has reported a sharp rise in claims submitted for review. In the last three months leading up to the end of 2010 24,995 payment protection claims were submitted.
Banks and consumers are waiting eagerly for the outcome of the review which may not be announced for several weeks. Regardless of whether the court sides with The British Banking Association or The FSA the verdict is sure to have a wide reaching affect on payment protection claims.
If you believe you have been mis-sold a payment protection insurance policy and would like to make a claim call 0207 471 2000. We offer a fast, professional service and are highly experienced in all aspects of the claims process.