Banks may be forced to pay GBP4bn in payment protection mis-selling scandal
Mon, 31 Jan 2011
Banks could be reopening tens of thousands of cases concerning payment protection insurance (PPI) mis-selling and have to shell out over £4bn in compensation .

Following a legal investigation, consumers who may not even have put in a complaint about the the sale of a policy with a loan or a mortgage may find that they are contacted by their provider at the time of the purchase and offered compensation.

The banks have brought a judicial review against the Financial Services Authority and Financial Ombudsman Service in the High Court where they contend that the criteria being used by the watchdogs to decide on complaints are more severe than the rules that were in place when the policies were sold. Although, if the banks don't win their case, the thousands of policies they have sold will have to be looked at again.

In the event that a policyholder is made redundant, or not able to work due to injury or illness, payment protection insurance will cover their debt repayments. However, a great number of consumers found that they would not be eligible for a payout due to exclusions in the small print.
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