Compensation claims could reach into billions
by Luke Whitmore, 9th May 2011
The banks have admitted defeat in the PPI mis-selling battle,
opening the floodgates for millions of people to make compensation
claims after being sold unfair policies.
In a great victory for consumers, the British Bankers'
Association (BBA) has announced that it will not be pursuing an
appeal after a court ruling last month which went against the
banks' interests. The case revolved around new rules from the
Financial Services Authority (FSA) regarding PPI mis-selling, which
financial institutions are required to apply retroactively. As a
result, some banks could end up spending billions on compensatory
payouts.
After the ruling in April, the British Bankers' Association
looked set to appeal, but after a surprise turnabout by Lloyds
Banking Group, which last week set aside £3.5bn to cover potential
PPI compensation costs, the enthusiasm of the other major banks to
fight the case seems to have collapsed, with Barclays, RBS and HSBC
now poised to drop the appeal.
PPI, or Payment Protection Insurance, is a form of insurance
policy which is intended to ensure a borrower can keep up
repayments in the event of an unexpected loss of income. It is an
optional extra offered on various types of loan, including
mortgages and credit cards, and the idea is that if the customer
should lose their job, suffer an illness or end up in any other
situation where their cashflow is unexpectedly reduced, the PPI
policy will kick in to cover the cost of repayments.
However, in recent years it became clear that many people who
had been sold these policies had no hope of ever claiming on them,
as their circumstances at the time of taking out the loan would
rule out a successful insurance claim. Other borrowers had been
told they needed to pay for a PPI policy if they wanted the loan,
and some people even had the cost of the policy added to the
total without being informed.
With the banks having admitted defeat, millions of customers
could be set to reclaim mis-sold PPI premiums in the coming months.
If you feel you have been a victim, we can help you reclaim mis-sold
PPI.
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"I just had to put pen to paper and write to say I'm more than delighted with my settlement that you won me back from my PPI I had with Lloyds TSB. The Claim Forms were simple to fill in. It was a breeze"
Mr R Evans 11 Nov 2010