Barclays latest lender to defy FSA on PPI

Barclays has become the latest lender to defy the Financial Services Authority and put on hold any complaints regarding Payment Protection Insurance that might be impacted by the forthcoming judicial review.

Yesterday, Lloyds Banking Group announced that customers can continue to log their complaint with the bank but no decisions will be made concerning sales related PPI complaints whilst the judicial review is ongoing.

Today, Barclays, owner of secured loan lender First Plus, has revealed that it is putting a portion of its complaints on hold as well.

A spokeswoman for Barclays, says: “All PPI-related complaints will be reviewed as we receive them - if they are impacted by the issues covered by the judicial review and therefore cannot be resolved at this point then we will write to the customer to inform them of that.

“Complaints on matters not affected by the judicial review will be assessed in the normal way.”

The British Bankers Association has applied to the courts for a judicial review of the FSA’s complaint handling approach.

The BBA says the FSA’s procedure for PPI complaints risks setting a precedent which will allow the regulator to apply new rules to previous sales for any financial product.

The FSA recently published a policy statement and open letter to the industry advising they should consider complaints about PPI not just by reference to the detailed conduct of business rules which applied at the time but also to standards that are based on the FSA’s guiding principles for doing business.

This could result in more than 2.5 million people being refunded as much as £2.7bn in total.

Santander however says it will continue to deal with all PPI complaints.

The BBA says: “We believe the FSA is effectively creating a precedent which permits it to apply new rules to previous sales – even where those sales were regulated by other FSA rules.

“Therefore this ruling might not only affect customers who have bought PPI, but might also set a precedent that could affect all products regulated by the FSA.”

The BBA says it has been necessary to take action because there is insufficient legal clarity about what the FSA and FOS is proposing in this area.

The FSA says it will contest the British Bankers’ Association’s judicial review of new PPI complaints handling measures.

The FSA says in the last five years there have been more than a million complaints made to firms about PPI. In 2009/2010 alone, customers referred 49,196 complaints to the Ombudsman which then upheld nine out of ten in the complainant’s favour.