Banks challenge PPI rule changes

Sam Jackson

January 25, 2011

November 13, 2018

Banks challenge PPI rule changes

New regulations forcing banks to change the way they handle sales of payment protection insurance (PPI) and complaints about mis-selling are being challenged at the High Court.

The rules, which were introduced in December, are intended to ensure banks treat customers fairly both when they take out PPI and if they submit a complaint over the way the cover was sold.

The British Bankers' Association (BBA) says it is unfair that the regulations apply retrospectively and is initiating a judicial review against the Financial Services Authority (FSA) and Financial Ombudsman Service.

Under the new rules, banks will have to discuss the policy's main points with a customer, rather than just handing them a leaflet, and will also have to stress that the cover is an optional extra.

The FSA estimates that the new rules will lead to PPI providers paying out up £1.3 billion in compensation for new complaints that are received during the coming five years, and up to £3.2 billion as a result of reviewing previous PPI sales and proactively contacting customers to offer them redress.

The BBA said the policy was like having a road with a speed limit of 30mph, which was later changed to 20mph, and deciding to hand out speeding tickets to people who drove at 30mph before the limit was reduced.

Sam Jackson

Money Dashboard

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