Will FSA Take Action Against The Banks?
Most recently, a group of banks namely Barclays, HSBC, Royal Bank of Scotland and Lloyds have told those claiming refunds on mis-sold loan insurance that their cases will only be decided after hearing the outcome of their legal challenge to the FSA rules. The British Bankers Association have filed for judicial review against an order by the Financial Services Authority that the banks review the payment protection insurance sales.
Payment protection insurance, commonly known as PPI, is a type of insurance which is sold alongside financial products such as loans and credit cards to cover repayments if the borrower or cardholder is somehow unable to service the payments due to unemployment or illness. PPI is, however, controversial because there are many reported cases of policies being mis-sold to customers who end up being unable to claim the benefits resulting in banks making insane profits from the premiums that were sometimes added to the loan amount, driving up the costs for customers.
Based on a report on the 11.08.2010 this year, banks may be forced to refund up to £3.2 billion worth of mis-sold ppi and it is no wonder why they have resorted to filing for a judicial review against the FSA’s order. On the consumer’s side, it would be of great interest especially those who are presently in some form of debt or another to review their ppi to see if they have been mis-sold or have paid in excess of what they actually need to. Companies are available to assist such customers to make ppi claims and in this economic climate, any recovery is very much welcomed indeed.