Bankers' appeal delays payouts

Thousands of consumers waiting for compensation over the mis-selling of payment protection insurance face long delays because of the British Bankers' Association's challenge against new complaint-handling rules.

The BBA has requested a judicial review of Financial Services Authority (FSA) rules coming into force in December requiring banks to reassess previously rejected PPI complaints dating back to 2005. The case is unlikely to begin before April and could last for several months.

Complaints unaffected by the judicial review will still be processed, according to the BBA, led by chief executive Angela Knight. But hundreds of thousands of claims will be effectively put on ice until it is over.

The BBA said that where this is the case, customers will be contacted by their bank.

It added: "Customers should be assured that all complaints will be reviewed - even those delayed by this judicial review process.

"There is no deadline for receipt of complaints. If customers have a problem regarding PPI they should contact their bank and, if necessary, complain in the normal way."

Its line was backed by high street banks including Royal Bank of Scotland, HSBC and Barclays.

Lloyds Banking Group previously said it would not consider any PPI claims until the judicial review was complete.

However, Lloyds told The Scotsman that while there may be a delay if clarity was needed from the FSA or the Financial Ombudsman Service because the judicial review may impact on the complaint, claims not affected by the review would be resolved.