Barclays next to drop case
BARCLAYS is to follow Lloyds in abandoning an industry-wide appeal against a high court ruling that will cost banks billions. The decision will leave other banks with little choice but to drop the case against the FSA on payment protection insurance (PPI).
But City A.M. has learned that despite the likelihood of the banks giving up on the appeal, the industry is discussing plans to strongly condemn the FSA’s enforcement of what they say is “retrospective justice” and to demand reassurance from the regulator that it will not act in the same way on other issues.
The row concerns the FSA’s insistence that banks apply guidance issued in 2010 to complaints concerning the sale of PPI that occurred before that date. The FSA says that the guidelines merely clarified practices that banks should have been following pre-2010, a stance that infuriates the banks.
The 2010 guidelines imposed more onerous requirements to, for example, make sure customers understand whether PPI is appropriate for them. But the British Bankers’ Association (BBA) argued unsuccessfully that the FSA was asking banks to apply new rules retrospectively.
In a sign of banks’ fury, it is likely that the BBA will tomorrow take the unusual step of criticising the industry regulator and calling for the FSA to reconsider its approach.
The BBA’s Angela Knight told City A.M.: “We need to have a discussion about the whole principle irrespective of what we decide on the appeal.”
The FSA is unlikely to take kindly to criticism. A source close to the regulator said: “It was a challenge to our whole way of life because principles are central to what we do.”