Payment Protection Insurance ('PPI') Update; Insurance Coverage Issues – Pensions Mis-selling Revisited?

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Background

The High Court has dismissed the British Bankers' Association's challenge to the FSA prescribed guidance on the proper investigation and complaints-handling process for the selling of Payment Protection Insurance. Unless it is overturned by the Court of Appeal, the court's decision, and the enforcement of the guidance, will have huge cost consequences for the banking community.

As the dust begins to settle on the latest controversy between the Regulator and its community, it seems clear that whilst the focus may be different, many lessons are to be learned from the recent past. If it is not exactly a case of "pensions mis-selling all over again", there are clear parallels.

History shows that the Financial Services Regulator is not afraid to apply a retrospective approach, particularly where it perceives there to have been generic or widespread mis-selling practices. In the mid-1990s, the SIB required pensions providers and financial advisers to conduct a prescribed internal investigation of past selling practices relating to transfers and opt outs from occupational pension schemes and the corresponding investment in private pension plans. In 1994, SIB ordered a review of past sales practices from 1988 onwards, but whilst requiring an assessment of previous practice (and to that extent, a retrospective investigation), it did not apply the benefit of hindsight. Rather, firms were required to assess sales practices by compliance standards and rules applying at the time.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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