ppi-mis-selling

BBA CAVES IN ON PPI JUDICIAL REVIEW

admin — Mon, 09 May 2011 12:27:35 +0000

Following Lloyds TSB group’s decision on Thursday (5/5/11) to withdraw its support for the Judial Review instigated by the Britisher Bankers’ Association (BBA) and a similar decision by Barclays on Sunday, The BBA aannounced this morning that it will not be seeking leave to appeal the judgment handed down three weeks ago, in the High Court, which ruled against the BBA and the banks and in favour of the Financial Services Authority (FSA) and the Financial Ombudsman Services (FOS).

Daniella Lipszyc – head of specialist consumer law practice Ultimate Law Ltd commented “This is a great victory for consumers. However, I cannot see the banks just rolling over - consumers will have to put their case to lenders. Consumers will need to take advice regarding the value of their claim as historically lenders have always tried to short-change consumers, relying on the consumers’ inabilty to correctly calculate the amount of redress entitled to them.”. Ms Lipszyc adds that “Consumers should be very wary of self-help sites, as these cannot not tell you the correct amount of redress you are entitled to or whether the redress you have been offered is adequate”. Ms Lipszyc’s main concern now is the lengthy delays consumers will experinece in the processing of their claims. She believes that consumers will have to wait 6 – 9 months for resolution.

LLOYDS TSB PULLS OUT OF BBA ACTION

admin — Mon, 09 May 2011 09:30:25 +0000

Lloyds TSB Group advised on Thursday (5th May 2011) that it was withdrawing future support from the Judial Review action instigated by the British Bankers’ Assiociation (BBA) against the Financial Services Authority (FSA) and the Financial Ombudsman Services (FOS).

Although a decision against the BBA was handed down in the High Court on 20th April 2011, many expected the BBA to lodge an appeal. It has until 10th May 2011 to do so.

Lloyds has set asaide over £3 billion in anticipation of compensation awards.

Daniella Lipszyc – head of specialist consumer law practice Ultimate Law Ltd welcomed the decision and anticipated that other banks may now have second thoughts about pursuing an appeal.

PAYMENT PROTECTON INSURANCE (PPI) JUDICIAL REVIEW RULING

admin — Sun, 08 May 2011 18:07:22 +0000

On Wednesday 20^th April 2011, Mr Justice Ouseley handed down his judgment in the High Court, following the Judicial Review hearing in January. The Review, which was sought by the BBA, directly challenged actions taken by the FSA and FOS in protecting consumers from the continued widespread mis-selling of payment protection insurance (PPI), and the provisions for providing consumers with financial redress.

The actions taken by the FSA, which were being challenged by the BBA, were taken as a result of numerous FSA warnings that had been issued to the banks being continually ignored. Widespread mis-selling continued unabated. The relatively poultry fines imposed by the FSA for such breaches were of little consequence to the banks, which were making billions of pounds in profit each year from selling these policies.

Whilst there is nothing wrong with income protection policies per se, these PPI policies were extremely expensive, offered limited cover, contained numerous limitations and exclusions and would often pay out less than the total of premiums paid for the policy – consumers would have been far better off if they had self-insured. There were many occasions when these policies were sold to consumers who could never be eligible to make a claim. A general theme to the mis-selling was that these policies increased consumers’ level of borrowing by around 30-40% – consumers who were already financially strapped. The last thing these consumers needed were loan funded policies that further increased their indebtedness and exasperated their financial situation.

The judgment will now require the banks to pro-actively identify mis-sold policies, as part of a “root and branch” sales review. Where potential mis-selling is identified, banks will now be obligated to right to consumers who may have been affected, even where no complaint has been lodged. The problem will be how such information is communicated. In previous episodes, such as when “red” re-projection letters were issued where endowment polices were projected to mature at a loss, communications were vague and failed to spell out what a complaint of mis-selling comprised of or that the re-projection letter started the clock ticking from a legal limitation point of view.

Even where lenders have had been instructed to write to their customers, following a fine for PPI mis-selling, the obligation was placed on the consumer to take action. Where financial/insurance policies are concerned, it is well known that consumers find these matters complex and often incomprehensible. They often end up doing nothing – it is this inertia effect that lenders have traditionally relied upon to mitigate the level of claims against them.

This decision will cost the banks billions of pounds over the next 5 years. It is likely therefore that they will try and identify grounds for appealing this judgment – they have 21 days to do so. No cases will be processed in the meantime, and that is likely to continue if permission to appeal is granted. Even if they are not given leave to appeal, the decision to deny that appeal can itself be appealed. The banks have so much to lose that a last shot at appealing the decision is inevitable, provided that the legal grounds can be identified to do so. Those who attended the Judicial Review could not fail to notice the very eminent team of QCs employed by the BBA and the cohort of barristers supporting it from leading London chambers. They will be spending the next few days scrutinising the judgement, hoping to find some chinks in the armour.

Even if there is no appeal, the complaints system is totally clogged up. Despite Claims Management Companies (CMCs) advising FOS on an on-going basis, of the amount of claims in the pipeline, FOS have failed to gear up sufficiently and have publicly stated that claims could take up to a year to resolve. This will only get worse and delays of 18 months or more are likely. Banks relish the thought of this, as it starves CMCs of cash and drives them out of business. This effectively takes away the spearhead of attack by consumers, as the vast majority of claims are submitted by CMCs on behalf of consumers.

Caution needs to be exercised in respect of self-help sites. If a claim goes wrong after following their advice, or the advice appearing a “thread” that they publish, these “barrack room lawyers” can only give you their sympathy. There is no redress against them – they are generally unregulated – so consumers are not protected if poor advice is given. The other major consideration is that redress is complex to calculate, particularly where serial refinancing has occurred. Few consumers will be able to calculate whether any redress offered is correct. So whilst some consumers might leap up and down having received a few thousand pounds in redress – money they often desperately need – they are unlikely to appreciate that they were entitled to far more – perhaps double or even triple, depending on the circumstances. They could of course rely on the integrity of the banks, assuming that redress would be properly calculated – but since when have banks been honest with consumers? Mis-sold endowments; rip-off bank and credit card charges, mis-sold PPI policies; wholesale rejection of complaints that FOS subsequently over-turns.

Unless the banks are going to come clean, taking the hit and moving on – rather than adopt their normal tactics of dragging matters out for as long as possible – the FSA and FOS will be unable to cope without further resources and funding.

The FSA has stood silently on the side lines during the Judicial Review process, despite being provided with wide scale evidence of banks ignoring the complaint processes set down by the FSA – this year, some 80 – 90% of claims submitted to the banks have been put on hold. The FSA now needs to instruct banks on what specifically they should be undertaking to deal with the matter; give them clearly defined timescales to carry out these steps and should issue the banks with templated letters to use, so there is no hiding behind clever wording, technical or legal expressions or pages of diatribe.

There is no point in leaving it to banks to mis-interpret the requirements placed upon them once again. The FSA should also set out for consumers, in simple concise terms, what constitutes mis-selling; what steps the banks will be undertaking and what consumers should now expect from banks in respect of dealing with the PPI policies sold to them.

We can only hope that this ruling constitutes a positive turning point in that consumers will receive the compensation they are rightfully entitled to. We need a new ethos to be adopted by banks, from the top down, that misleading consumers and selling them duff products will not permitted and will be severely dealt with.

Daniella Lipszyc – head of specialist consumer law practice Ultimate Law Ltd welcomed the decision but awaited the BBA’s decision as to whether it would be seeking leave to appeal. That decision has to be made by Tuesday 10^th May 2011.

PPI JUDICIAL REVIEW JUDGMENT – UPDATE

admin — Fri, 15 Apr 2011 12:50:48 +0000

Judgment in respect of the Judicial Review instigated by the British Bankers Association (BBA) against the Financial Services Authority (FSA) and The Financial Ombudsman Service (FOS) is to be handed down next week, on Wednesday 20th April 2011.

Since the inception of judicial revview process, lenders have almost completed stopped issuing final responses to the tens of thousands of complaints they have received reach month relating to mis-sold PPI policies. The vast majority of these have now been referred to FOS for a decision. FOS recently announced that due to the backlogs, cases could now take upto 12 months to process.

“Whilst we welcome the news that the judgment will be handed down next week, this is only the end of the first round” comments Daniella Lipszyc of specialist consumer law practice Ultimate Law Ltd. “We expect the losing party to appeal, which will drag matters out even longer. In the meantime, it is the poor consumer who loses out, who are desparately fighting to get financial redress following the mis-selling of hundreds and thousands of these pernicious PPI inurance policies” adds Ms Lipszyc.

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FSA, FOS & OFT COORDINATE TO REDUCE MIS-SELLING RISKS

admin — Tue, 05 Apr 2011 18:29:40 +0000

The Financial Services Authority (FSA), the Financial Ombudsman Service (FOS) and the Office of Fair Trading (OFT) have just announced the formation of a joint committee.

The Committee is intended to strengthen coordination and promote continued discussion of the topics rather than to present a comprehensive account of the issues or a set of agreed conclusions.

Daniella Lipszyc, a leading solicitor in the area of consumer law comments “If the new committee will facilitate faster action to emerging mis-selling scandles, then consumers will benefit. All too often, these organisations issue report after report on mis-selling issues, consult endlessly and years later do something about it. By then the horse has well and truly bolted. The net result is that the financial organisations involved have made fat profits at the expense of consumers.”

Ms Lipszyc runs a specialist solicitors practice - Ultimate Law Ltd - which has its headquarters in Manchester.

NEW PPI RULES TAKE EFFECT 6th APRIL 2011

admin — Tue, 05 Apr 2011 18:12:37 +0000

The new PPI rules (“orders”) issued by the Competition Commission come in to force tomorrow (6th April 2011).

The new rules are being implemented as a result of the wide-scale mis-seling of PPI by lenders.

The basic information on the changes are:-

PPI will not be allowed to be sold alongside a loan until at least seven days after the loan is agreed.
Borrowers will have to be given a personalised quote, detailing costs and cover.
There must be wording saying that PPI is an optional add-on to a loan.
In addition, the order contains a further proviso that will require all PPI sellers to reveal how many customers were successful in claiming on their policies.

Daniella Lipszyc, a leading solicitor in the area of consumer law comments “The Competition Commission started investigating this PPI scandle over 5 years ago. It has made recommendations and drafted new rules, the implementation of which have been delayed and delayed. These delays have reulted in lenders making even more profits on these products, as consumers continue to be ripped off by these horrendous policies. The horse has well and truly bolted.”

Ms Lipszyc runs a specialist solicitors practice - Ultimate Law Ltd - which has its headquarters in Manchester.

PPI JUDICIAL REVIEW – UPDATE

admin — Tue, 05 Apr 2011 17:52:59 +0000

The outcome of the Judicial Review into PPI Redress is expected shortly. Whilst a decision has been reached, it will not be made known until officially handed down by the Judge. This is expected as soon as the legal teams of the various parties can fix an avaialble date in the Judge’s calendar.

The Judicial Review (JR), which commenced at the end of January, was instigated by the British Bankers Association (BBA) against the Financial Services Authority (FSA) and the Financial Ombudsman Service (FOS), challenging the ability of the FSA to impose fines for breaches by lenders of certain rules and regulations rules as well as challenging the calculation methodoly for determing consumer redress. The legal challenge is expected to run on, even after the Judge has delivered his decision, as it is likely to be challenged by the losing party.

Daniella Lipszyc, a leading solicitor in this area of law comments “I hope, for the sake of consumers, that this matter is resolved without further delay. I am concerned, however, that the decision handed down will be appealed and consumers will face another long wait before getting the redress they are entitled to.”

Ms Lipszyc, who runs a specialist solicitors practice based in Manchester - Ultimate Law Ltd - has been inundated by requests from frustrated consumers to assist them with their PPI claims.

FOS ANNOUNCES PPI CLAIM DELAYS OF 12 MONTHS

admin — Tue, 05 Apr 2011 17:13:50 +0000

Over recent days, the Financial Ombudsman Service (FOS) has been writing to claims management companies advising them that due to a large backlog of claims, some cases are “…likely to take over a year to be resolved…”. The huge backlog, amounting to tens of thousands of claims, has risen as a resut of banks refusing to process claims (other than “look” at them) whilst the Judicial Review on PPI redress is ongoing.

The outcome of the Judicial Review (JR), which commenced at the end of January, is expected shortly. The JR was instigated by the British Bankers Association (BBA) against the Financial Services Authority (FSA) and the Financial Ombudsman Service (FOS), challenging the ability of the FSA to impose fines for breaches by lenders of certain rules and regulations rules as well as challenging the calculation methodoly for determing consumer redress. The legal challenge is expected to run on, even after the judge has delivered his decision, as it is likely to be challenged by the losing party.

Daniella Lipszyc, a leading solicitor in this area of law comments “yet again, lenders are trying to wriggle out of their obligations to recompense consumers who were ripped of by lenders selling expensive PPI insurance that provided very poor cover and frequently put financially stretched consumers into a worse financial situation”. Ms Lipszyc runs a specialist solicitors practice - Ultimate Law Ltd - which has its headquarters in Manchester.

“The vast majority of consumer claims are going nowhere at the moment, and won’t be for some considerable time. The only effective route now available to consumers is through the legal system” comments Ms Lipszyc. ”As a result of the Judicial Review, we have been inundated by requests from consumers to assist them with their PPI claims” adds Ms Lipszyc.

PAYMENT PROTECTION INSURANCE MARKET INVESTIGATION

admin — Mon, 14 Mar 2011 16:22:04 +0000

The orders to be laid down by the Competition Commission following its investigation into the widespread mis-selling of PPI by lenders, are expected to be published shortly.

Sceptics feel that the benking sector have been stalling the Competition Commission, as the final report by the Competition Commission was published over 2 years ago.

Daniella Lipszyc of specialist consumer law practice Ultimate Law complained that this was “too little too late”. “The horse has well and truly bolted” says Ms Lipszyc. The mis-selling has continued for a considerable time after the final report was published, over 2 years ago. It is an absolute disgrace that lenders and insurers promoting these policies have been able to profiteer in the intervening period, pushing more consumers in to greater debt”.

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PAYMENT PROTECTION INSURANCE MARKET INVESTIGATION

Administrative timetable for the making of the Payment Protection Insurance Market Investigation Order

The administrative timetable published below on 14 February 2011 is indicative and has no statutory basis. Any revision to the timetable will be published on this website.29 January 2009	Final report published
26 November 2009	CAT remittal to the CC to reconsider the point-of-sale prohibition as part of its remedies package
14 October 2010	Publication of final decision on remittal
25 November 2010	Publication of draft order for 30-day formal public consultation
14 February 201122 February 2011 Late March / early April 2011*	Further consultation on draft OrderDeadline for responses to further consultation on draft Order Order to be made
October 2011*	Measures relating to provision of information in marketing materials and to third parties come into force
April 2012*	All other elements of the remedies package come into force

UNWELCOME SMOKE & MIRRORS

admin — Tue, 08 Mar 2011 11:12:29 +0000

Despite various press artcles, it is not yet clear whether Welcome has yet sold its loan book to Bovess. It would appear that Welcome is trying to limit its claims liabilities against the loan book, prior to the transfer.

As part of that, they have apparently paid £50m to the Financial Services Compensation Scheme (FSCS), as a fund to cover mis-selling claims brought by borrowers.

Interestingly, Bovess’s registered office is the same as Picture Home Loans (no 1) Ltd, the company that took over contracts from Picture Finance.

Consumer experience where pursuing Picture has been along the lines that Picture Finance has gone bust, contact the administrator, line up with all the creditors.

Whilst Welcome may no longer be required to consider complaints and claims against it, as FSCS has now taken over jurisdiction from the Financial Ombudsman Service (FOS), legal avenues remain available, particularly where loans are still in operation. Consumers should take advice from the consumer law experts Ultimate Law Ltd or read Daniella’s blog - the leading solicitor in the field.