British Banks Drop PPI Mis-Selling Appeal
Sector: Banking & Finance
9th May 2011
Britain's big banks have abandoned a controversial appeal over payment protection insurance, opening the way for billions of pounds in compensation for those mis-sold policies. The British Bankers Association (BBA) said the legal action over the scandal which saw thousands sold the policies they did not need was being dropped to provide certainty for customers.
Pressure for the industry to pull the appeal has been building since Lloyds, the 41pc state-owned lender, said last week that would not take part and set aside £3.2bn to compensate customers mis-sold PPI cover. The death knell for the action came over the weekend when Barclays joined Lloyds in pulling out of action, leaving Royal Bank of Scotland and HSBC isolated on the issue. The decision by banks to pursue the action after all the help they have received during the financial crisis has caused controversy across the political spectrum and angered the public.
Barclays confirmed today it would not be part of the appeal. The bank said it has set aside £1bn to cover PPI mis-selling claims and would now begin to process all "on-hold and any new complaints" from customers about PPI policies. Bob Diamond, the chief executive of Barclays said: “We don’t always get things right for our customers; when we get them wrong, we apologise and put them right. That’s our commitment to our customers, and it applies to the way in which we will deal with PPI complaints.”
The BBA, the industry body, had until May 10 to appeal. It said in a statement on Monday: "In the interest of providing certainty for their customers, the banks and the BBA have decided that they do not intend to appeal." The BBA, led by chief executive Angela Knight, had previously argued that the Financial Services Authority and the Financial Ombudsman Service had retrospectively changed the rules on selling PPIs, which set a dangerous precedent.
Source: Telegraph
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