On 9 May 2011, the British Bankers Association (BBA) announced that it would not be appealing the High Court judgment that decided the Financial Service Authority’s complaints handling rules relating to the mis-selling of payment protection insurance (PPI) were lawful. This has left financial institutions, including banks and insurers, with the prospect of satisfying a vast number of compensation requests from consumers.
The news that the BBA will not be appealing comes after earlier news, on 5 May 2011, that Lloyds Banking Group had withdrawn from any appeal of the judgment, announcing that it had set aside £3.2bn for potential costs arising out of redress payments. That decision contributed to Lloyds posting a £3.47bn loss for the first quarter of 2011.
Since the BBA’s decision not to appeal, Barclays, HSBC and The Royal Bank of Scotland have all announced that they have reserved funds to cover future PPI compensation payments. These provisions have now surpassed the £4.5bn which the FSA estimated that PPI compensation payments would cost the industry.
To view the BBA’s statement regarding the PPI judicial review, please click here.
