A landmark ruling will now allow millions to reclaim Payment Protection Insurance (PPI) which they have been mis-sold in conjunction with credit cards and personal loans in the past.
UK banks had claimed that new rules on PPI imposed by the Financial Services Authority (FSA) in December 2010 were unfairly retrospective. However, the High Court ruled against the British
Banker’s Association and in favour of the FSA.
Many PPI claims were up held and payments frozen until a ruling was made. Although a further appeal is possible, it is likely that most claims will now progress and the floodgates for many more have been opened. Consumer group Which? has predicted that over three million consumers will receive payouts.
PPI is sold to cover loan or credit card repayments should the borrower become unable to pay. However, many have been unknowingly charged for PPI or sold insurance which they would never be able to claim on because, for example, they are self-employed or over 65. Some have incorrectly been told that they can only get a loan or credit card if they also take out PPI.
Peter Vicary-Smith, Which? chief executive, commented, “[This] announcement is a huge victory for consumers. If the banks paid redress to every consumer who had been mis-sold PPI, they’d be looking at a possible £3 billion bill. Instead of dealing with mis-selling, they’re trying to wriggle out of paying up using the courts - this now has to stop.
“The sheer volume of PPI complaints the Ombudsman upholds in favour of the consumer proves that consumers should always go to the Ombudsman if their claim is rejected by their bank," he added.
Financial News
