UK banks challenge PPI rules

The UK banking community, backed by the British Bankers Association, has applied to the High Court for a judicial review of the PPI rules, which were set to come in on 1 December. These are rules produced by the FSA (Financial Services Authority) in relation to payment protection insurance and more importantly an industry wide review of past arrangements even if there has been no complaint from the underlying customer.

Many banks are concerned that the proposed changes in PPI, which effectively allow consumers a cooling off period and the ability to shop around for their payment protection insurance, will impact upon their income. There were suggestions that some PPI arrangements were basically duplicating other protection which many consumers already had in place, something which may well have affected their long-term value for consumers. The British Bankers Association is challenging the legal standing of the proposed rule changes and indeed looking for clarity with regards to potential compensation in the future.

This is a situation which has been ongoing for some time now and one which will eventually be settled in the High Court. This is definitely something of a battle royal with the FSA on one side and the British Bankers Association on the other.