BBA to fight FSA over PPI complaints procedure
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The British Bankers’ Association says the Financial Services Authority’s complaints procedure for Payment Protection Insurance risks setting a precedent which will allow the regulator to apply new rules to previous sales for any financial product.
The FSA recently published a policy statement and open letter to the industry advising they should consider complaints about PPI not just by reference to the detailed conduct of business rules which applied at the time but also to standards that are based on the FSA’s guiding principles for doing business.
The BBA has applied to the Courts for a judicial review of the FSA’s approach contained in its policy statement, and the Financial Ombudsman Service’s approach to PPI sales complaints contained in its guidance.
The BBA says: “We believe the FSA is effectively creating a precedent which permits it to apply new rules to previous sales – even where those sales were regulated by other FSA rules.
“Therefore this ruling might not only affect customers who have bought PPI, but might also set a precedent that could affect all products regulated by the FSA.”
The BBA says it has been necessary to take action because there is insufficient legal clarity about what the FSA and FOS is proposing in this area.
The FSA says it will contest the British Bankers’ Association’s judicial review of new PPI complaints handling measures.
It FSA says in the last five years there have been more than a million complaints made to firms about PPI. In 2009/2010 alone, customers referred 49,196 complaints to the Ombudsman which then upheld nine out of ten in the complainant’s favour.
Since the FSA took on regulation of PPI in 2005 it has taken enforcement action against 24 firms for sales failings. The FSA says it has carried out three thematic reviews, issued warnings, halted the selling of single premium PPI with unsecured personal loans and visited over 200 firms in order to improve the market.
The FSA strongly believes that the package of new complaint handling measures outlined in policy statement 10/12 is a sensible and fair solution for consumers and the industry alike.
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