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Banks surrender on Payment Protection Insurance

Article by Simon Christopher
Posted: 13/5/2011 - Last updated: -
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The British Bankers' Association has formally conceded defeat in its legal battles over compensation for people mis-sold payment protection insurance.

A recent High Court verdict upheld the strategy of city watchdog the Financial Services Authority in demanding that banks actively contact those who might be eligible for compensation, using today's standards rather than those that applied at the time the policy was taken out.

The BBA, which had called that policy unjust, had until this week to appeal against that verdict, but has now announced it will not do so, saying it took the decision "in the interest of providing certainty for [its] customers."

The decision followed an announcement by Lloyd's Banking Group that it had accepted the court verdict and had set aside £3.2 billion to pay claims. This week Barclays followed that position, setting up its own £1 billion fund. Independent commentators say those sums are in line with an estimated £7 billion to £9 billion bill for the entire industry.

Campaigners welcomed the news and said it was now time for banks to begin processing claims without any further delays. Some banks had argued they were unable to do this while the legal action remained active, a claim that has been disputed.



PLEASE NOTE: News items are intended for information only and should not be relied upon when making business insurance decisions. Due to their nature, some of the information in news stories including any references to taxation, legislation, regulation, or other issues may no longer be current.

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