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Re: Latest updates on PPI Judicial Review and claims on hold
Brilliant work EXC.
http://www.google.com/hostednews/ukp...1295917675269A
New PPI rules 'could cost £4.5bn'
(UKPA) – 4 hours ago
New regulations to control the selling of payment protection insurance to borrowers could cost the industry £4.5 billion, a High Court judge has been told.
Lord Pannick QC was launching the British Bankers' Association judicial review against the Financial Services Authority and the Financial Ombudsman Service over the principles and guidance which came into force in December.
He told Mr Justice Ouseley that the FSA estimated that implementation of the proposals could amount to £3.2 billion based on a 20% take-up by those contacted who bought PPI policies since 2005. "If that assumption is an underestimate of the response rate, the costs are going substantially to increase," he said.
The FSA estimates that PPI providers will have to pay out up to £1.3 billion in compensation for new complaints received during the coming five years. Lord Pannick said this could lead to 35 insurance companies failing with the resulting refunds to borrowers falling on the Financial Services Compensation Scheme.
The new regulations aim to ensure consumers are treated fairly, both when they buy payment protection insurance and when they complain about being mis-sold the cover.
They require providers to talk potential customers through the key features of a policy, rather than just provide them with a document giving the information, while they will also have to be able to show that it was made clear to the consumer that the cover was optional.
But the banks want the court to quash the regulations because they will not only apply to new policies sold after the beginning of December, but also to complaints relating to cover sold before the new regime was brought in.
Lord Pannick said it was an "error of law" for the FSA to state that its new policy gave rise to obligations owed by firms to customers and to suggest in its guidance to lenders that it did so.
"In any event it is an error of law for the FSA to state that a customer may be entitled to redress from the firm by reference to one of the principles that the FSA has made which regulate the sale of PPIs."
He added: "Our case will be that in these circumstances general standards of conduct and principle cannot impose conflicting obligations to compensate customers."
Brilliant work EXC.
http://www.google.com/hostednews/ukp...1295917675269A
New PPI rules 'could cost £4.5bn'
(UKPA) – 4 hours ago
New regulations to control the selling of payment protection insurance to borrowers could cost the industry £4.5 billion, a High Court judge has been told.
Lord Pannick QC was launching the British Bankers' Association judicial review against the Financial Services Authority and the Financial Ombudsman Service over the principles and guidance which came into force in December.
He told Mr Justice Ouseley that the FSA estimated that implementation of the proposals could amount to £3.2 billion based on a 20% take-up by those contacted who bought PPI policies since 2005. "If that assumption is an underestimate of the response rate, the costs are going substantially to increase," he said.
The FSA estimates that PPI providers will have to pay out up to £1.3 billion in compensation for new complaints received during the coming five years. Lord Pannick said this could lead to 35 insurance companies failing with the resulting refunds to borrowers falling on the Financial Services Compensation Scheme.
The new regulations aim to ensure consumers are treated fairly, both when they buy payment protection insurance and when they complain about being mis-sold the cover.
They require providers to talk potential customers through the key features of a policy, rather than just provide them with a document giving the information, while they will also have to be able to show that it was made clear to the consumer that the cover was optional.
But the banks want the court to quash the regulations because they will not only apply to new policies sold after the beginning of December, but also to complaints relating to cover sold before the new regime was brought in.
Lord Pannick said it was an "error of law" for the FSA to state that its new policy gave rise to obligations owed by firms to customers and to suggest in its guidance to lenders that it did so.
"In any event it is an error of law for the FSA to state that a customer may be entitled to redress from the firm by reference to one of the principles that the FSA has made which regulate the sale of PPIs."
He added: "Our case will be that in these circumstances general standards of conduct and principle cannot impose conflicting obligations to compensate customers."
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