PPI Judicial Review Hearing reports from court

[Amethyst]

Right, report back from RCJ at lunch break....

This morning has just been the BBA counsel - Lord Pannick QC - talking in a very monotone measured (slow) manner all morning. It looks unlikely that the FSA and the FOS will be able to put their case forwards today.

The case has attracted a lot of attention and it was lucky EXC and Tom got in, massively long queues and the court room was absolutely packed.

Nothingwe don't already know has come up in the BBAs monologue so far except maybe some figures that in 2006 an estimated 6.5 million policies were sold annually making £5.4billion per annum !!!!!

The Judge has asked a few explanatory questions but otherwise the morning was just the BBA putting their case forwards.

Counsel for the FSA spoke only once, when the BBA described the FSA's new requirements as 'new rules' - FSA's counsel leapt to his feet and said quite markedly ''no new rules, they are evidential provisions ''.

The BBA put forwards that the FSA had estimated the new measures will cost a certain amount and the BBA refuted their estimates, indicating it would cost a lot more. Justice Crousley asked the BBA what evidence they have that it will make a material difference in liability, and BBA's counsel couldn't answer.

The BBA described the principles in the FSA policy statement, of which there are 11, as the '' ten commandments '' and there was some debate over the relationship of the principles and the ICOBS rules.

In the BBA's summarising their case at the end, tey had two main point. The Judge interjected on the second point and said ''but doesn't this counter your first argument.''

Starts again at 2.05. Finishes around 4.30/5pm.

Eric Leenders was in court. Not sure who else.

[Amethyst]

Re: Latest updates on PPI Judicial Review and claims on hold

lol, as good a guess as any. Tbh it sounds like the Judge (and others in the court room) is getting a bit bored and asked Pannick to chivvy it along a few times. EXC will give you all the juicy bits later I expect lol.

[Amethyst]

Re: Latest updates on PPI Judicial Review and claims on hold

Not quite as busy in the court this afternoon but still standing room only. (Cig break update from EXC - things are still going on)

Pannick is still speaking so doesn't look as though there will be time for FSA and FOS to get much said.

The Judge is asking lots more questions and its getting more interesting (and Pannicks being more interesting apparently) with the ins outs whys and wherefores but it is complicated so will leave it to EXC to write something more in depth up later (or Tom tmw).

Will have a little bit more around 4.30/5pm.

Oh even if the application stage takes 3 days then it doesn't really matter as most of the arguments will be heard now whilst deciding on the applications and the substantive stage can get done in day or two.

[Amethyst]

Re: Latest updates on PPI Judicial Review and claims on hold

Pannick finished an hour before close of play. Flint (BBA QC) came on, spent an hour, going over same ground round in circles, the Judge looked a bit annoyed with repetitive nature of the case.

Flint another hour or so tmw then FSA/FOS get their turn.

One point claim against FOS as being out of time, and FOS decision was 2008, new argument why not out of time, FOS guidance published Nov 08 was the catalyst for policy statement by FSA published in Aug. Judge seems to think thats a bit tenuous.

FOS said they used principles since 2001, Judge asked why the BBA hadn't argued against that before now, and shockingly they didnt have an answer.

Anyways all closed for the day now, Exc's off for a Coke , and he'll be on later to fill in the big gaps lol. Tom's attending tmw and Friday so we should have most of it covered one way or t'other.

[EXC]

Re: Latest updates on PPI Judicial Review and claims on hold

I’ll try and summarise, as best I can, the main thrust of the arguments put forward by Lord Pannick for the BBA that Amethyst hasn’t already covered.

The BBA is claiming that the principles in the FSA’s policy statement are unfair additions to the ICOB and ICOBS rules that govern the standards of PPI sales.

Although they grudgingly accept that principles are in fact rules and therefore capable of being breached, they argue that the principles are too general and abstract to rely on when there is so much money at stake.

A crucial aspect of the principles - and this appears to be common ground with the FSA - is that unlike the more specific rules in ICOB & ICOBS, the breaching of principles in themselves don’t give rise to a legal liability to compensation from a firm to a customer. In other words an individual could not seek monetary compensation from a court in respect of a breach of the principles alone.

However I believe that this is distinct from the legal liability for breaching principles that firms have with the FSA as the FSA can and has fined firms for breaching principles in isolation.

And because the breaching of principles are incapable of giving risen to a legal liability to a consumer, the BBA is claiming that the FOS should not use the principles as one of the criteria they use in determining complaints and that when they do uphold a complaint, because an FOS compensation award is legally binding, this amounts to a legal liability. Lord Pannick said that the only way that the FSA could legitimately use the principles to confer legal liability was to ask Parliament to change the law.

In support of their argument that breaching principles was never meant to give rise to liability, Lord Pannick referred to the original legislation laid down by Parliament that gave the FSA it’s rule making powers and which appeared to expressly exclude principles from giving rise to consumer liability, and the judge commented that this was ‘’good evidence’’.

The judge then suggested that the FSA & FOS may argue that the principles were only one of the many rules that the FOS take into account when considering the merits of a complaint and as such the principles in themselves may not be responsible for the liability. He also said that notwithstanding the disputed status of the principles, the FOS were principally obliged to judge complaints on the basis of what, in their opinion, is fair and reasonable and that their discretion could be said to override it.

The BBA then went on to argue that the FOS were unaware that breaching principles does not cause liability and that the FOS had a duty to fully understand the legal consequences of the rules it used to judge complaints. In support of this Lord Pannick (rather cleverly I thought) dug out some case law from a judgment that Justice Ousley himself had made in 2002 in a case between the Norwich & Peterborough Building Society and the then Ombudsman, where Justice Ousley had stated that an Ombudsman does indeed have a duty to understand the legal consequences of the rules it uses.

However, I’m not so sure that the FOS didn’t know this and I wouldn’t be surprised if they came up with some evidence proving they did.

The way in which Lord Pannick repeatedly linked the ‘’misuse’’ of the FSA principles to and by the FOS is clearly meant to tie the FOS into the case against the FSA and make it more difficult for the judge to separate the claims against them, and thus circumvent the issue of the case against the FOS being time barred.

Almost nothing was said about the ‘common failings’ in the open letter - which was a major part of the BBA’s initial claim. You may remember that the FSA issued a statement on 24 November saying that the BBA had misinterpreted the common failings as breaches of rules (and not merely examples) and it looks like the FSA’s clarification has worked as the BBA have apparently dropped that part of their case.

On the issue of the policy statement requiring firms to conduct ‘root cause analysis’ (ie re-examine past PPI sales and offer compensation where due - even to customers who hadn’t complained) the BBA contended that the FSA should have sought legal permission from the Treasury under section 404 of the Enterprise Act to do this and that in not doing so, banks didn’t receive the procedural‘’safeguards’’ that sec 404 offered them.

One interesting thing that Pannick said was that if the BBA win the Judicial Review, ‘’what’s done is done’’. I understood this to mean that the BBA didn’t intend to challenge past complaints upheld by the FOS or fines already issued by the FSA in respect of PPI mis-selling by way of breaching principles.

When Lord Pannick had finished giving his submission, the judge summed up the BBA’s case:

‘’This is an ‘occupied field’ test. Having set out specific and detailed rules, the FSA are precluded from setting out guidance in that field - save by an amendment of the specific rules’’.

Looking objectively at the performance of the BBA’s counsel today I’d say that they started off badly but finished better. But really it’s impossible to gauge the strength of their case until we’ve heard the counter arguments from the FSA & FOS tomorrow.

[EXC]

Re: Latest updates on PPI Judicial Review and claims on hold

FSA and FOS barristers are quite boring to be honest so prediction for me is a BBA win to be honest....

Actually they're not at all. Although they only spoke briefly yesterday, both Brindle and Malek are really good - authoritive, charismatic, good speakers and have much more zing about them than Pannick who by contrast was sleep-inducingly dull - judging by the amount of people I spotted nodding off.

[Amethyst]

Re: Latest updates on PPI Judicial Review and claims on hold

LUNCH BREAK UPDATE ON JR PPI

Bear with me while I write this properly, just notes at mo, sorry if it doesn't make much sense, its bloomin' noisy outside the RCJ today!


The BBA's Counsel has been speaking this morning again - the main gist of the argument is that the firms historic procedures will reflect ICOBS, but they wont reflect the principles (ie the guidance) issued by FSA so therefore its unfair to expect them to ....the firms are saying they are shooting at a moving target and the rules have moved over time, since the firms procedures at the time only reflected ICOBS and not the guidance.

The firms are being a little out of order IMO in presenting to the Judge that all the firms comply with ICOBS - whereas in our opinion they would fail the test even just on ICOBS, but the firms are sayig that even if they folowed icobs they would still fail the test because of the guidance and moving goalposts.

cited 2008 decision ombudsman - against Postit????????? need to look that up unless anyone knows off top of their head ? possibly http://www.financial-ombudsman.org.u...decision-B.pdf ? http://www.financial-ombudsman.org.u...decision-C.pdf ? or http://www.financial-ombudsman.org.u...decision-a.pdf - or d/e/f etc I don't know without reading them all in full and of course the firms name and the complaintants names are redacted in those reports.

online guidance from FOS issued in 2008 - which differs from ICOBS again.

pannicks junior expanded occupied field test argument - (from yesterdays report this is '''''
‘’This is an ‘occupied field’ test. Having set out specific and detailed rules, the FSA are precluded from setting out guidance in that field - save by an amendment of the specific rules’’.''''''' ) once a regulator has issued rules in a particular area they are prohibited from giving further guidance within that area except by way of changing the rules..... bba saying fsa should have changed the rules rather than issuing guidance - no response to that yet from fsa/fos.


The principle is basically that if the regulators fail to act in good time and get the rules right first time its not for them to apply retrospective rules..... (Agree with that)

FOS online guidance 2008 adjudicator entitled to take into account anything to ensure fairness - usual argument of FOS not being tied to specific law/rules etc including the FSA guidance.


BBA finishing after lunch.

So if FSA lose they are able to change ICOB but not retrospectively.

Still standing room only in the court room.


Basically I think the argument is do the principles change the rules retrospectively and if so can the FSA do that (and I think the answer is no)

[Amethyst]

Re: Latest updates on PPI Judicial Review and claims on hold

FINISHED FOR THE DAY

BBA talked till 4pm today - essentially same submission - that the FSA, instead of making amendments to the principles, should have conducted an industry wide review sec 403 FSMA - essence moving goalposts creating liability for damages which they would not otherwise be liable for.

In last 15 mins the FSA guy stood up - first point is why has FOS been dragged in to it - the FOS is the second stage of a two stage complaints proces - first is to the firm itself, second is to the Fos. The reason the FOS is in it would be absurd to insist the firms didn't have to apply the principles but the fos could. 2008 guidance isnt reallly even guidance but an online resource.

FSA pointed out the BBA arguments not very coherent. This is not a challenge to the use of the principles as they have been in use since 2005 and it is not a challenge to guidance issued and not a challenge to the open letter to the industry itself.

The application is a challenge to the lawfulness of the amendments to DISP. Entire case is about statutory construction - ie. do the FSA have the legal powers to make the changes to DISP - without using section 403/404 FSMA (whichever bit it is about consultation)

FSA doesnt have any specific powers to make the handbook. They are using their General powers under FSMA and no one has challenged since 2005. Where as FOS have very specific powers under FSMA and manner it goes about making decisions included in schedule 17 to the Act.

[Amethyst]

Re: Latest updates on PPI Judicial Review and claims on hold

Last bit for today.....


FSA last thing the error the BBA are making on one very basic principle, the BBA are saying the change to disp creates a cause of action for consumers where none existed under original rules, however that is a mistake to draw an analogy between a cause of action in court on one hand and a complaint by a customer on the other. It is important because 'what is a complaint' (see para 1.1 DISP) ''a written or oral expression of disatisfaction with a financial service product whether that complaint is reasonable or unreasonable...

Resolution of the complaint isnt just about financial redress but can be a replacement/change/apology which is a far cry froma cause of action in court.

a breach of disp can be the basis of a customer complaint even if it does not give rise to cause action. Also a breach of disp does not create a cause of action in court - FSMA.

The reason the FSA bought out the guidances are because 90% being overturned - FOS so trying to alleviate the burden by telling the banks how to deal with the complaints, but the banks concerned that the letter not just dealing with complaints but need to make their own investigations and root cause analysis and make redress even if the customer hasn't complained.



Judge asked about timing FSA finished by end of tmw, FOS should be done midday Friday, banks then sum up - Nemo not sure if they get to speak or not.... end of Friday the judge will give indication if and when might be able to give judgment - case has been expedited so judgement should be.

Judge asked what would happen to firms if they didn't follow guidance - the BBA replied they'd just write to them and tell them off (lol) and poss take action under FSMA. A JR is basically '' if I'm going to quash decision it has to make a difference.'' and BBA couldnt really show it would make a difference whether they win or lose this JR lol.


This bit wasnt in court so is just me/Tom saying it.

FOS is good for consumers (over court) as they allowed to take into account things which can't be taken into account in court, and they are free (unless you use a CMC to submit the form for you (sorry CMC guys), can award interest and have a fab uphold rate for consumers.

[Amethyst]

Re: Latest updates on PPI Judicial Review and claims on hold

mmmm ok, all finished at RCJ now, Tom didn't get in till the last half hour so missed all the legal arguments , it's confirmed that Judgment is reserved till a later date, no specific indication when but it is being expedited, and that's about all I can tell you for definate at the moment. So ears to the ground peeps.

[george]

Re: Latest updates on PPI Judicial Review and claims on hold

Hi All

I just wanted to say thankyou for the information provided by you all over recent months. I do own a cmc company - and due to the bad press we sometimes get have been reluctant to post as I have not wanted my comments to be misunderstood in any way. We do not charge up front fees and I feel give a good and fair service to our clients.

That said you guys have really helped me to get information over recent months and as I have been at the JR all week I feel it is only fair to share what I feel I have observed. Please just be aware these are my thoughts so if anyone disagrees I can only apologise.

OK here goes:-


The BBA seemed to centre their case on a couple of points:-

• It is an error of law for FSA to rule that principles give rise to redress ( and therefore for FoS to rely on these principles when looking at complaints)
• It is an error of law for the FSA to not go for treasury approval when asking lenders to offer automatic redress under FSMA

There was much barter backwards and forwards on:-

• Are principles actually rules or not etc
• Are principles actually givinng rise to a complaint. As a complaint can mean many forms of redress the principle is not giving right to redress but the complaint is. (or if the complaint is referred to the FoS the FoS is)
• Was CP 10 in fact new rules or a clarification of exisiting rules and lenders were simply not acting fairly and ignoring ICOB/(s).

It was clear the BBA were not challenging rule breaches in themselves. They accepted they had a problem and as long as a clearly defined ICOB/(s) or GISC rule was broken they could understand the complaint. It seemed to me they do not like mainly the automiatic application of rules to non complainants and full reviews of their book. (That is my interpretation only)

The really interesting part for me was when FoS spoke Thursday afternoon. They stated of 100 000 complaints ruled on in the last two years not one had been upheld due to principles alone. All had been upheld based on rules - they closely linked ICOB /(s) 2 and Principle 7 at this point. What was interesting is that on Friday none of the BBA's guys challenged FoS's appraisal - in fact one even went so far to say - 'we do not challenge the FoS figures quoted - we do not even challenge those complaints upheld by rules - we are challenging the more complicated complaints' . Which again in my opinion proves the banks are putting complaints on hold which should not be and are using this as an excuse.

The BBA then focused on treasury review for a large part of their summing up Friday which again in my opinion says they are looking at stopping the need for them to redress non complainants.

For our part we are seeing offers from all lenders now but that may be because we have always worked on sensible claims and not those which do not show a rule breach. For any lender who is now putting our claims on hold we are asking why and then sending all correspondance to FoS and the FSA.

I hope this helps and as I said this is just my interpretaion of the last few days.