FSA Wins Round One of Payment Protection Insurance Battle
The High Court has today given a ruling which will have major implications for the financial services industry, adding more woes to an already beleaguered sector.
Last year the Financial Services Authority (“FSA”) introduced rules to stop perceived mis-selling of Payment Protection Insurance (“PPI”). The new rules introduced by the FSA required providers to make it clear to consumers that cover was optional and also required them to discuss the key features of the cover as happens with other products.
However, the banks complained that the rules were unfair because they would effectively apply new rules to old policies i.e. they would be applied retrospectively. Accordingly the banks, represented by the British Bankers Association, launched a judicial review in the High Court. The High Court has today found against them.
If this High Court decision stands Britain’s banks will be forced to re-open thousands of cases and consider claims for compensation. Most commentators believe the banks will appeal within the next 21 days.