BBA won't appeal PPI decision

THE British Banking Association (BBA) has announced that it won't appeal last month's High Court decision on Payment Protection Insurance (PPI) mis-selling.

By not taking court action any further, the banks commit themselves to paying out to millions of consumers to claim back policies they were sold alongside credit cards and personal loans.

The association said in a statement that the banks had made the decision, "in the interest of providing certainty for their customers."

Martin Lewis, founder of consumer website Moneysavingexpert and a long time campaigner on PPI said, "This is a wonderful day for consumers. For once the banks have done the right thing and backed down.

"As much as £9 billion that was wrongly taken from consumers could now be paid back - an economic boost as money from banks' coffers will move into the pockets of real people."

Really the end?

However, the BBA hinted that it was still holding to the principal that the FSA shouldn't be allowed to apply rules on selling retrospectively, the crux of their argument against paying compensation.

"We continue to believe that there are matters of important principle which we will be taking forward in other ways with the authorities," the body said.

That's an ominous promise which brings to mind backroom deals with the FSA over the amount paid out to consumers or the types of cases they'll be prepared to deal with.

However, it seems unlikely that the FSA would risk being seen to renege on their hard won court battle by making such deals.

Besides, Barclays have already had to set aside £1 billion to repay mis-sold consumers and the Lloyds Banking Group have accounted for £3.2 billion and long ago stopped selling PPI.

Instead, it is likely that the banks are referring to the FSA's use of rule six of its Principles for Business ("A firm must pay due regard to the interests of its customers and treat them fairly") in the court case, rather than a specific rule which defines the case, in this instance what exactly it is that constitutes mis-selling and whether firms should be liable if that exact definition has changed over the years.

For example, Richard Caird, partner at law firm SNR Denton, who acted for the FSA, said that, "the decision also brings... welcome clarity to the obligations of firms considering whether to pay redress to consumers, particularly the obligation to take breaches of the FSA's Principles for Business into account in those considerations."

How the banks plan to influence the FSA on this matter, however, remains unclear.

What now for consumers?

Consumers who took out a loan or credit card in the last six years are being urged to check documentation for PPI payments.

Those who didn't realise that they were paying for the insurance, were told that they must take the policy or were sold the cover even though it was unsuitable for them can make a complaint.

Those that were self employed at the time of the policy or had a pre-existing medical condition but didn't disclose that when the policy was sold are likely to have been mis-sold.

An intermediary in the form of a claims handling firm is unnecessary to make a complaint, consumers just need to send a letter and, after this judgement, many should hear that they're entitled to money back in any case.