UK banks ordered to pay back PPI abuse cases

Banks have lost a judicial review to overturn regulations regarding the mis-selling of payment prote

Britain's banks will be forced to re-open thousands of claims over the mis-selling of payment protection insurance (PPI) after losing a judicial review.

The High Court has ordered British banks to refund clients to whom they had mis-sold PPIs, thus confirming a directive by the Financial Services Authority (FSA), which was challenged by financial institutions.

Over 1.5 million complaints on litigious PPI selling procedures had been reported to the FSA in the last five years -- 100,000 of which were registered in the last financial year.

PPI is a mechanism which clients can purchase on a voluntary basis when contracting a loan. It constitutes an insurance on the client's loan, and thus implies a significant premium -- which covers the debt if an unexpected event such as illness or redundancy were to strike the bank's client.

However, FSA reports show that these insurance policies had been sold to clients that either did not need them, or simply did not know they were paying for it. The financial watchdog had previously issued a directive ordering banks to systematically consult misled clients and compensate those who did not willingly enter the scheme and were therefore paying unnecessary premiums. Compensations, which include the premium and interests, could mount to a final bill of close to £4.5bn.

The British Banking Association said it was "disappointed" by the judgement. It added that banks would now "consider the details of it very carefully" before deciding if any appeal was to be carried out. They have 21 days to start further procedures.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.