allaboutwomen

Payment protection insurance has been a scandal for decades, and one which in the last few years has erupted in a torrent of compensation claims. The FSA has come down squarely on the side of the consumer and introduced rules in December saying banks had to look over all their old cases to see if there are grounds for compensation - regardless of whether there has been a claim or not.

Unfortunately the banks have put their foot down, taking the FSA to court to fight the new rules, and refusing to review any claims at all in the intervening months. So how will the case affect you?

The insurance was supposed to kick in if you couldn't pay your loan because of unemployment or sickness. The problem was in the way it was often sold, either to people who would never be able to claim - such as the self-employed, to people who had no need for it, or as part of the loan application, so people didn't realise they were buying separate insurance.

New rules
The banks have accepted there has been some misselling, and have been feverishly reviewing the stream of compensation cases. They knew they wouldn't get away scot free, but the new FSA rules have led them to draw the line. They are refusing to review all their past sales (even where there has been no compensation claim), which would mean they could have to pay anything up to £2.7 billion.

The banks are arguing that they were following the rules in place at the time, and so to go back and change the rules retrospectively is unfair. The FSA is arguing that these principles always applied, and so there's nothing retrospective about the new rules. There's now a judicial review, which is expected to go on until Friday, where the High Court will decide whether these old cases will be revisited.

So what does it mean for you?
If you have already lodged a compensation claim, and not been paid, this has been stuck in the system since the banks decided to take legal action last October and stopped reviewing claims. The case this week will mean you get some movement - one way or the other.

There are thousands of people stuck in the system. The FSA has received about 2,500 new complaints a week, which have been sitting waiting for this week.

This is in itself a scandal, as there's no earthly reason why they should have refused to address existing complaints, and treat them in any way other than any other standard complaint.
Which? chief executive, Peter Vicary-smith, says:"The banks are still obliged to consider all PPI complaints, so there is no excuse for them to stall. Which? wants the banks to stick to the rules and carry on processing their customers' legitimate complaints."

The FSA has already made its feelings known on this subject, and insists that the banks start reviewing PPI claims again, so whatever happens in the case today, the process should start moving again.

If you haven't made a claim
If you haven't made your claim yet, the key is not to be put off by all this legal maneuvering. Official figures show that 89% of complaints taken to the Financial Ombudsman Service are upheld, so it's well worth making a claim. You have every right to complain to your bank, and if they insist on stalling for longer than eight weeks, you have the right to go straight to the Ombudsman, so nothing should stand in your way of getting redress.

But what do you think? Will this week bring an end to your long wait, or will the banks be able to wriggle out of this one too? Let us know in the comments.