Judicial Review

Press Release

Even though inflation continues to bite consumers have this week been handed a welcome boost by the High Court. A dispute over the rules designed to deal with the sale of payment protection insurance (PPI) has ended with victory for individual borrowers in the face of the collective might of the country’s banks.

PPI is sold along with a loan, credit card or mortgage and is designed to cover the repayments if the borrower loses their job or is unable to work due to ill-health. This might sound like a great idea to add peace of mind when times are hard many people who have the insurance are not aware of much the insurance is costing them. PPI premiums tagged onto credit cards and loans can be expensive but also attract interest which will inflate the cost even more.

Many people were sold policies which were not suitable for them because they already had medical conditions which wouldn’t be covered or because they were self employed. A lot of people did not even know that they had PPI or that they were paying for it.

In the last 5 years the Financial Services Authority (FSA) has seen a huge increase in the number of complaints relating to the sale of PPI as more and more borrowers become aware of their rights. The situation became so bad that FOS had to tell the British Bankers’ Association (BBA – the organisation which represents the lenders who sell PPI) that the banks should look at all of the PPI policies which they had sold in the past and review them.

If the way each policy was sold at the time did not meet the standards which are now in place then the borrower should get their money back, plus interest. The BBA refused and took the FSA to court as a result. However Mr Justice Ounsley decided that the banks were in the wrong and that they should start to review all of their PPI sales.

Peter Joyce of EB Legal Solicitors, a specialist in PPI and consumer credit law, said he was delighted by the news. “This is great news for borrowers who have PPI policies which should never have been sold to them. The banks have been very obstructive recently by trying to play down consumers’ rights to receive compensation and have delayed matters at every turn. However this should open the floodgates for people to recover what is rightfully theirs and I would urge anyone who has any kind of credit agreement to check if PPI was sold to them”.

The High Court’s decision comes after a string of court cases in which borrowers who had brought claims under the Consumer Credit Act were unsuccessful in having their debts declared unenforceable. However measures designed to safeguard consumers’ are still giving protection to those who need it most. Mr Joyce continued “in recent years the courts have been inundated with speculative claims from individuals who just wanted to avoid paying their debts. However recently we were able to force a lender to write off a client’s debt. It was clear that the lender had ridden roughshod over our client’s legal rights to tie him into a loan which was extremely expensive to pay for a conservatory which he had been pressured into buying. Consumer protection is still alive and well”.

EB Legal Solicitors is a law firm based in Handforth which specialises in PPI, consumer credit and personal injury claims.