CREDIT CARDS

Brits Compensated as Banks Lose PPI Battle

British banks have lost their battle against the FSA which will see them compensate customers as far back as 2005 for the mis-selling of PPI on financial products such as credit cards.

Millions of consumers will receive compensation as new rules are implemented.

Represented by the British Bankers’ Association (BBA), Britain’s banks took the FSA and the Financial Ombudsman to court, challenging their new rules as unfair, the Guardian reported.

The new proposals put forward by the FSA and the Ombudsman stated banks should review all previous PPI cases back to 2005, whether consumers had complained about their policy or not.

The high court ruled again the BBA, meaning banks will now be obliged to dish out compensation for mis-sold payment protection policies, estimated to cost the industry up to £3billion.

Providers from December 2010 are required to talk to their customers about a payment protection policy, which protects them should they become unemployed and unable to pay bills such as credit card debts, to prevent the mis-selling of the product.

Customers have discovered in many cases that they had been paying for PPI but would not qualify for a payout should they need it due to the specific terms on the policy contract.  Some cases had even been brought to light where consumers did not even know they had been paying premiums towards it at all.

The Ombudsman stated they had received over 200,000 complaints in total about mis-sold PPI policies, and three out of four cases were found to be in favour of the consumer.

PPI on Credit Cards

A payment protection policy on a credit card will typically, if not mis-sold, pay the person’s credit card bill, at least the minimum amount, each month, if they become unemployed, sick, or have an accident which affects their income.

A provider will cover this bill for about 12 months, or a set period as discussed in the contract.

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