Consumers considering complaining about their payment protection insurance (PPI) policies have been urged to act swiftly after the banks announced they are to challenge some of the new complaints handling rules which are due to be introduced.
The British Bankers' Association (BBA) has filed papers with the high court asking for some decisions made by the Financial Services Authority (FSA) to be judicially reviewed.
In August, the regulator unveiled a package of measures to protect consumers who have been sold PPI, or who are looking to take it out.
PPI covers repayments on credit products if the borrower is unable to pay off loans due to accident, sickness, unemployment or death, but accusations that lenders have mis-sold the product have long dogged the industry.
With the FSA hoping the package will ensure customers are treated more fairly when complaining about PPI and will be better protected when buying the product, firms selling PPI were told they must change their ways by 1 December 2010.
However, the BBA has now decided to launch a legal challenge on the basis that introducing new rules retrospectively is illegal and could set a precedent which might then be applied to other products.
Fearing a 'whole can of worms' might be about to be opened up, the BBA told the BBC: "If your house became a controlled parking zone overnight, you wouldn't expect to be fined for parking there yesterday."
In response, the FSA has announced it will contest the judicial review, and that it expects firms to continue handling PPI complaints while the process is ongoing.
The regulator said that more than a million PPI complaints had been made in the last five years, adding that in 2009/2010 alone, customers referred 49,196 complaints to the ombudsman which then upheld nine out of ten in the complainant's favour.
"The FSA strongly believes that the package of new complaint handling measures outlined in policy statement 10/12 is a sensible and fair solution for consumers and the industry alike," said the regulator.
"And that is why the FSA will vigorously contest the BBA's judicial review of the new complaint handling procedures for the PPI market."
Although exact timescales for the whole sorry mess to be sorted out are unclear, people considering complaining about their PPI policies should do so now.
If the courts were to rule in favour of the BBA and the banks, the goalposts are likely to move again and securing compensation might become more difficult once again.
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