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  • FIRST POST
    • MSE Guy
    • By MSE Guy 11th Oct 10, 7:09 PM
    • 1,628Posts
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    MSE Guy
    MSE News: Banks put PPI claims on hold in defiance of regulator
    • #1
    • 11th Oct 10, 7:09 PM
    MSE News: Banks put PPI claims on hold in defiance of regulator 11th Oct 10 at 7:09 PM
    This is the discussion thread for the following MSE News Story:
    Last edited by MSE Guy; 13-10-2010 at 2:14 PM.
Page 24
  • TheBigDog
    Well,

    I've read it 4 times between Friday and this evening, and I've got to admit - I'm disappointed. When I first heard the argument the banks were putting up I thought that there was no chance that the FSA would win on this one and the BBA had then by the buster browns.

    I was expecting some serious firworks, but instead we got a damp squib - and the banks, as per normal have screwed it up by being too greedy. If the banks have dropped a clanger selling PPI in the first place, then they've dropped an even bigger one by trying to defend their actions - there's so many holes in their arguments, I bet Delme Griffiths is licking his lips at this one. For anyone whos unsure, here's our boy:

    http://www.russell-cooke.co.uk/employees-detail.cfm?id=679&sub=

    Pretty experienced, experience in Judicial Reviews, and more importantly, he's acting on behalf of the FOS.

    Now, I'm not going to write pages and pages of why the BBA's case is totally flawed, but I'll pick a few bits out which I found interesting:

    I've noticed that they're asking for an urgent consideration on this, and they're going to be ready for trial on the first available days after the 15th of December - so hopefully this will get heard asap, so it shouldn't drag out for months and months waiting for a trial date - however, the loser will appeal to the Supreme Court.

    OK - what they want. The BBA have asked for the following:

    That Policy Statement 10/12 is withdrawn and quashed; That the FOS's PPI guidance rules are quashed and any other relief the Court sees fit.

    No suprises with the Policy Statement, but they've screwed up royal with asking for the FOS guidelines to quashed.

    For those who are reading this and are totally lost with the law and regulations that are at stake here - I'll try and explain it in plain language. The FSA have 2 sets of rules to consider when looking at PPI sales. The first set of rules that apply are their 'Principal Rules', which are set out to ensure fair play is given to everybody and they are the cornerstone of how firms should deal with their clients. In these Principal Rules are rules such as 'Treating Customers Fairly' and 'Communicating With Clients' to name but two of them. In addition, there are also insurance regulatory rules as well - such as ICOB, or the updated version, ICOBS, which also should be taken into account. What the BBA are up to here is that they're stating that the Principle Rules shouldn't be taken into account by and large by the FSA or the FOS, and that only the relevant insurance rules should be taken into account at the time of sale - ie - ABI, GISC, ICOB or ICOBS. It basically means that the FOS shouldn't deal with complaints using Principle Rules because that would let the banks off the hook with some of the arguments that are put before the FOS.

    I'm not going to write each of the paragraphs of their claim on here because it would take too long, but the following points are in specific reference to the paragraph numbers of their pleadings:

    Para. 4 - 'the figures could substantially increase' - ok - they've admitted to £4.4Billion already, with a whole lot more if pre 2005 sales are taken into account - I wonder how much liability they've got in total? Based on the figures we know already - the total bill here could be north of £10Billion in total.

    Para. 14 - Once you've stopped laughing! Yep, the BBA only think that there's problems in the PPI market because the FSA and the FOS perceive that there is. So we may as well ignore God knows how many investigations there's been into the PPI market and the findings of the Competion Commission and all the fines that have been handed out - the BBA think that there aren't any problems with PPI at all, it's just the FSA.

    15(c) - It's in black and white - the only cases that are directly affected are prior to ICOB rules coming into force.

    37 (c) (i) - I've noticed how they've casually failed to mention all the interest you've got pay on the premium as well here! (this comes apparent why later on). And also the BBA's assertion that the industry, in agreementwith the FSA, ceased to offer lump sum PPI - Really? thats news to me and it's going to be news to the Competition Commission as well. Hello??? BBA???? Are Barclays not one of your members, and did they not appeal the Competition Commission's decision to the Competition Appeal Tribunal and lost????? Thats hardly industry agreement is it?

    40 (a) - Thats totally untrue. Because of their non pro rata rebate, the loan payment doesn't just drop to the contractual loan payment because the unfair rebate will automatically mean it's higher.

    40 (b) (i), (ii) & (iii) - Total horses**t, and you know it as well BBA. Rule of 78 is designed to ensure you keep your profit margin if people pay off loans early, and your policies are repaid on a pro rata basis, but pro rata on risk and not time? Pull the other one BBA - it's got bells on! LOL! (this also gets a mention in Para. 55(b))

    43. GISC was voluntary - but what they didn't say is that no insurer would take your business if you weren't a member. It might be voluntary, but you couldn't do anything without being a member - it worked a bit like the Mortgage Code Compliance Board - you couldn't write a mortgage if you weren't a member.

    Para. 73 - People only started complaining in ernest after the CAB's supercomplaint and the Competition Commission's investigation, and with it, the FOS uphold rates went up. Are the BBA really trying to state that this is the CAB and CC's fault for making people aware that those nasty banks had put a crap product out there and how dare they complain????

    74 (b) - What - and lenders dont use template letters? lol! I see at least a letter every week which is denying liability from banks where they've forgotten to change the surname of the complainant from the last template they sent out.

    86. CMC's??? were to blame as well for inducing complainants to make a complaint? lol!

    104 - I notice they didn't empashise the first bit, where it states 'breach of duty of care or any other requirement of General Law.' I wonder if the BBA have heard of the Misrepresentation Act?????

    128(c) - So, you don't think that you have a legal liability to customers who have been mis-sold the policy? How about the remedies in Common Law?

    165 - The case law that they've used is v. interesting. I think they've shot themselves in the foot with this bit. In the judgment of Burnton LJ, he said that 'provided that the adviser has complied with the current law, regulations, regulators rules etc, etc and good industry practice, then the adviser can be assurred that the will not be liable to the client. This is a p*ss poor bit of case law, because there is no way they can prove that they complied with the Judges thoughts on this - how can it be good practice selling a ppi policy to someone who can never claim because of the exclusions on it?

    ANNEX

    5 I was rolling on the floor laughing when I read this. A Judge will destroy them on this. They're basically saying - so what - we sold the punter a duff product, but why should we have to give him his money back?

    15 (n) - Total crap - a recommendation has to be that the product is suitable to the client, not the number of them they have. They're stating here that because they only sell one lump sum product, it has to be suitable because they haven't got any other ones to offer. total bulls**t. It's a bit like taking your car to a garage for a puncture and they state, well because we haven't got a tyre, the only product we've got in stock is an exhaust, so we'll sell you that because it's the only thing we've got and you obviously need to buy something for your car.

    15 (o) - the last 2 lines! So BBA, it's alright then to sell someone a lump sum policy and they lose a small fortune when they cancel it or pay it off early through consolidation?

    19(p) - So it looks as though its ok to rip people off with life cover then and charge thousands for it when you can get it elsewhere for pennies?

    19 (s) - This, in my opinion, is worst bit of it in the whole of their claim, and I think it's disgraceful. The BBA, dont think that the interest that you pay on the lump sum premium is actually the cost of the policy - only the premium itself. The BBA say the interest is different as it allows the customer to facilitate the cost of the policy over a period of time. So, the interest is the cost of providing you the credit for the insurance loan and is not a direct cost of the insurance cover - I'm ROFFL! F**K OFF BBA - are you in cloud cuckoo land or what??????? I can't wait for the Judge to pick up on this in Court!

    Finally, when I first read the Claim, one persons words were in my mind, and it involves our old friends Amanda and Basil Rankine (remember them - they were the ones that got hit with a £100k legal bill after losing their unenforceable credit agreement claims in the High Court). The persons words are HHJ Simon Brown, and I'll quote this from his Judgment:

    (9) It is worth remembering that the context and and purpose of the CCA: the Consumer Credit Act was introduced in protecting the individual unsophisticated in financial affairs in contracts with unscrupulous and sophisticated financial institutions. It was not designed to help individuals in the financial services business make money out of financial institutions through exploiting its undoubted technicalities.

    What odds is anyone giving me that we don't hear a Judge saying the same thing next year regarding the BBA? - a la:

    'It is worth remembering that the context and and purpose of ICOB and FSA Principle Rules were introduced in protecting the individual unsophisticated in financial affairs in contracts with unscrupulous and sophisticated financial institutions. It was not designed to help financial institutions avoid their liabilities through exploiting its undoubted technicalities.'

    My money's firmly behind the FSA and FOS. I don't think that the BBA have a prayer on this.

    I can't wait to get to the office tomorrow morning - the Banks better get ready for World War 3.

    Regards,

    TBD.
    Last edited by TheBigDog; 31-10-2010 at 11:11 PM.
  • debt55
    Excellent work, once again...

    Are you planning to have a discussion with Mr Delme Griffiths... not that he does not know his job, but you obviously have a lot more hands on experience in day to day dealings with the BBA members - the lenders - and may be in a position to give a good steer on certain situations.

    Keep it up, we need more people from a professional, and full time, capacity to come on these boards.

    Martin and co, make far more money on breakfast TV to be bothered with this kind of stuff... allegedley!
    • Alpine Star
    • By Alpine Star 1st Nov 10, 10:57 AM
    • 1,259 Posts
    • 611 Thanks
    Alpine Star

    Martin and co, make far more money on breakfast TV to be bothered with this kind of stuff... allegedley!
    Originally posted by debt55
    You're forgetting that he could be bothered to give evidence before the Commons Treasury Select Committee for nothing - which I suspect is more than the ''professional'' BigDog will manage to achieve.
    • marshallka
    • By marshallka 1st Nov 10, 10:59 AM
    • 14,494 Posts
    • 20,661 Thanks
    marshallka
    http://www.express.co.uk/posts/view/208764/US-results-raise-hopes-for-British-banks

    THE banking sector takes centre stage this week, as trading updates provide a third-quarter health check on a host of Britain’s biggest companies.

    SURPRISINGLY good results from US banks as a result of sharply lower losses on bad debt have raised hopes of a robust quarter for British lenders.
    But recent rules forcing banks to put aside more cash in reserve have raised the issue of capital requirements

    The cost of claims over the mis-selling of payment protection insurance (PPI) will be another talking point when Lloyds Group – thought to be the most exposed to PPI – updates tomorrow
    • mrs-stressed
    • By mrs-stressed 1st Nov 10, 11:12 AM
    • 582 Posts
    • 992 Thanks
    mrs-stressed
    Thank you TBD for your extremely interesting and understandable post. Its so nice to read something that is actually readable and not full of gobbldegook wordage. Delmes CV is very very impressive too.......
    • mrs-stressed
    • By mrs-stressed 1st Nov 10, 11:18 AM
    • 582 Posts
    • 992 Thanks
    mrs-stressed
    [QUOTE=Alpine Star;38047474]You're forgetting that he could be bothered to give evidence before the Commons Treasury Select Committee for nothing -

    I listened to Martins impassioned response to all questions thrown at him and he has done more for us lot than any one else I can think of. His silence on this latest round of events worries me a little though. One cant be champion and not tell anyone what you are doing! Its not a secret.
  • Sampras
    [QUOTE=mrs-stressed;38047972]
    You're forgetting that he could be bothered to give evidence before the Commons Treasury Select Committee for nothing -

    I listened to Martins impassioned response to all questions thrown at him and he has done more for us lot than any one else I can think of. His silence on this latest round of events worries me a little though. One cant be champion and not tell anyone what you are doing! Its not a secret.
    Originally posted by Alpine Star
    Perhaps Martin, like many many others, senses a stitch up is on the cards. The underlying law IMO is now largely irrelevant where public and policy considerations are at stake. All it takes is a one-eyed Judge and it really is game over. Can we really rely on the Judiciary to be neutral?
  • debt55
    [QUOTE=Sampras;38048402]
    Perhaps Martin, like many many others, senses a stitch up is on the cards. The underlying law IMO is now largely irrelevant where public and policy considerations are at stake. All it takes is a one-eyed Judge and it really is game over. Can we really rely on the Judiciary to be neutral?
    Originally posted by mrs-stressed
    All the more need for LOUD noise NOW, not after the event!
  • petecorfu
    Remember remember the 25th of november!
    Remember remember the 25th of november! 2009. "Millions of bank customers hoping to be refunded overdraft charges have been dealt a major blow by a Supreme Court judgement." maybe Martin fears as i do another major bent judgement on this ppi matter! Even though it looks like the bba dont have a pray! "the old boys club" will no doubt make another complete mockery of the british law system! and pull a few strings for the fat cats! I have no faith what so ever in justice winning through here! its sickening that we think we live in a fair country! we do not!
  • debt55
    Remember remember the 25th of november! 2009. "Millions of bank customers hoping to be refunded overdraft charges have been dealt a major blow by a Supreme Court judgement." maybe Martin fears as i do another major bent judgement on this ppi matter! Even though it looks like the bba dont have a pray! "the old boys club" will no doubt make another complete mockery of the british law system! and pull a few strings for the fat cats! I have no faith what so ever in justice winning through here! its sickening that we think we live in a fair country! we do not!
    Originally posted by petecorfu
    that is the fear, and if mr lewis and co do not make loud noises now to let "them" know we are watching this time...

    what chance do we have?
    • Alpine Star
    • By Alpine Star 1st Nov 10, 6:45 PM
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    • 611 Thanks
    Alpine Star
    that is the fear, and if mr lewis and co do not make loud noises now to let "them" know we are watching this time...

    what chance do we have?
    Originally posted by debt55
    This is truly desperate.

    If you really believe that the court has struck some kind of corrupt deal with banks and that somehow Mr Lewis should and could morph into the Caped Crusader and save the world from this imaginary evil then perhaps you'd feel more at home here http://www.elvis-is-alive.com/
  • debt55
    This is truly desperate.

    If you really believe that the court has struck some kind of corrupt deal with banks and that somehow Mr Lewis should and could morph into the Caped Crusader and save the world from this imaginary evil then perhaps you'd feel more at home here http://www.elvis-is-alive.com/
    Originally posted by Alpine Star
    haha you are amusing, like a clown
  • Cardinals
    Mr Daniels doesn't seem to think he will be paying back much PPI:

    Lloyds sees increased profits on mortgages

    </EM>
    Taxpayer-backed Lloyds Banking Group today said moves to increase rates on new mortgages and borrowers switching from cheaper fixed-rate deals was driving higher profits on home loans.

    Lloyds, which is 41% owned by the Government, saw increased income in its retail banking arm during the third quarter thanks to greater mortgage margins.
    Borrowers reverting on to standard variable rates and raised rates on new lending helped offset "subdued" demand for home loans, according to the group.
    The Halifax and Cheltenham & Gloucester owner said it had a "good" third quarter overall thanks to further declines in losses on loans turned sour since the half year, when it reported profits of £1.6 billion.
    Lloyds said it was pricing new mortgages to "more appropriately reflect risk and funding costs", hitting first-time buyers and home-movers.
    But the bank stressed that interest rates were still below the average seen before the credit crunch in 2007.
    The third-quarter performance has kept Lloyds on track for a "good financial performance" for the full year.
    Lloyds said earlier this year that it was on course for annual profits - which would mark its first full-year surplus since being bailed out by the taxpayer at the height of the financial crisis.
    Chief executive Eric Daniels, who last month announced plans to retire in 2011, said: "I am pleased to report that we had a good third quarter in our core business as we continue to deliver against the group guidance we provided at the interims."
    But Lloyds has come under pressure in recent days as banking experts have speculated on the potential bill the group could face for claims relating to controversial payment protection insurance (PPI), with one analyst estimating it could be forced to pay up to £1.5 billion.
    The company is among a group of major banks backing a British Bankers' Association move to seek a judicial review against rules on PPI compensation.
    Mr Daniels said he believed the banks had a "very good case" and "don't believe there will be a charge".
    Lloyds also signalled today that it would not need to raise more capital to meet tough new rules on capital strength under the so-called Basel III plans.
    There had been fears that other UK banks would follow the lead of Standard Chartered, which recently announced aims to tap shareholders for cash to help bolster its balance sheet to take the new regulations into account.
    • robbedofmymoney
    • By robbedofmymoney 2nd Nov 10, 10:23 AM
    • 877 Posts
    • 1,578 Thanks
    robbedofmymoney
    i suppose it really depends on how you read into his comments,
    he is not saying he is not going to be paying out ppi refunds, he is merely saying he does not expect there to be a change in the rules the FSA are trying to introduce.

    and of course he would not openly say they would be liable for such a large payout as this would hit the group share value instantly aand cause chaos.

    after spending a long time going over the banks case the BBA have put forward i can honestly say i see nothing for the FSA and FOS to worry about.

    it may take a bit of time after appeal (by the banks) but ultimately they don't really have a credible arguement.
    Last edited by robbedofmymoney; 02-11-2010 at 10:27 AM.
    I'm proud to say that the banks no longer take money from me after becoming debt free
  • Cardinals
    He is referring to the £1 billion impairment charge Lloyds should make in their accounts if they believe they will have to pay out the claims.
    • robbedofmymoney
    • By robbedofmymoney 2nd Nov 10, 10:50 AM
    • 877 Posts
    • 1,578 Thanks
    robbedofmymoney
    He is referring to the £1 billion impairment charge Lloyds should make in their accounts if they believe they will have to pay out the claims.
    Originally posted by Cardinals
    sorry, i thought it said change, not charge,
    either way he will not admit Lloyds will have to put aside £1.5bn for this,
    I'm proud to say that the banks no longer take money from me after becoming debt free
  • Sampras
    I always the thought the directors of a company had a legal responsibility to account for any bad debt provisions/material impairments. If the dirtectors fail to acccount for such expenses and the auditors dont pick up on it then they are both in deep soup. Could it be that LTSB really do believe they are about to get away with this one?
  • debt55
    I always the thought the directors of a company had a legal responsibility to account for any bad debt provisions/material impairments. If the dirtectors fail to acccount for such expenses and the auditors dont pick up on it then they are both in deep soup. Could it be that LTSB really do believe they are about to get away with this one?
    Originally posted by Sampras
    lol, you need to go back 2 years and read what the chaps at the helm of bear sterns and lehman bros said weeks before they went bust.

    biggest gangsters on the planet.
    • Alpine Star
    • By Alpine Star 2nd Nov 10, 3:49 PM
    • 1,259 Posts
    • 611 Thanks
    Alpine Star
    I always the thought the directors of a company had a legal responsibility to account for any bad debt provisions/material impairments. If the dirtectors fail to acccount for such expenses and the auditors dont pick up on it then they are both in deep soup. Could it be that LTSB really do believe they are about to get away with this one?
    Originally posted by Sampras
    There is a provision at the end of the accompanying press release which deals with it, under the heading Forward Looking Statements:

    ''The Groupís actual future business, strategy, plans and/or results may differ materially from those expressed or implied in these forward looking statements as a result of a variety of risks, uncertainties and other factors, including, without limitation..............exposure to regulatory scrutiny, legal proceedings or complaints.......''

    http://www.lloydsbankinggroup.com/media/pdfs/lbg/2010/2010Nov2_LBG_IMS.pdf
    • steveh31
    • By steveh31 3rd Nov 10, 7:22 AM
    • 44 Posts
    • 48 Thanks
    steveh31
    Banks fear big rise in £4.4bn PPI bill

    By Josephine Cumbo
    Published: November 2 2010 23:44 | Last updated: November 2 2010 23:44

    Banks say the cost of implementing new complaint handling measures for payment protection insurance could be “substantially” more than regulator’s estimate of £4.4bn.
    The warning of a “very substantial” impact for PPI sellers is made by the British Bankers’ Association in its 89-page application for an “urgent” judicial review of new regulatory measures due to come into force within weeks.

    The application was lodged with the High Court last month, but the full grounds for the banks’ challenge are only just emerging. The key basis of the legal challenge, according to the documents, is the Financial Services Authority’s requirement for its new guidance to be applied retrospectively on PPI sales made before the regulation.
    “The scale and impact of the FSA’s decision upon the industry is very substantial,” said the BBA in its application.
    “The FSA estimated the cost of its proposals could amount to £3.2bn in respect of reviewing past sales, with £1.2bn in respect of new complaints handling rules. [But] the FSA’s figures are based on the assumption that only 20 per cent of customers would respond to any given customer contact exercise.”
    The BBA said that if this estimate proved to be conservative, or if allowance was made for compensation and costs in respect of sales before January 2005, then those figures could “substantially increase”.
    The FSA has yet to fully respond to the BBA application, but has said that it would “vigorously” contest the challenge.
    US investment bank Morgan Stanley has estimated the cost to UK banks of PPI mis-selling to be up to £5.1bn. However, Morgan Stanley said these costs would be “manageable” and could be helped by the judicial review.
    “The review benefits banks [in the] near term by allowing delay in paying claimants and deterring future claims,” said Morgan Stanley.
    PPI is designed to meet repayments for credit cards, personal loans and other unsecured debt if the borrower is ill, has an accident or is made redundant.
    But the FSA has identified problems with the sale of PPI with more than 1m complaints made to firms over the past five years.
    Its new rules, due to come into force on December 1, would see new complaints “handled properly and redressed fairly where appropriate”.
    But the BBA said “banks could not be reasonably expected to apply the new rules from December while they were actively seeking to have the guidance quashed”.
    Since initiating legal proceedings last month, banks involved in the review have halted processing complaints affected by the action until the High Court hearing, likely to be early next year.


    Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
    Last edited by steveh31; 03-11-2010 at 7:25 AM.
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