R (British Bankers Association) v FSA and others

On 20 April 2011 the Administrative Court handed down judgment in R (British Bankers Association) v FSA and others, a high-profile judicial review challenge to amendments to the FSA Handbook regarding firms’ obligations to handle complaints from consumers relating to Payment Protection Insurance (“PPI”).

The Court (Mr Justice Ouseley) held that the FSA’s Principles can give rise to obligations as between firms and customers notwithstanding the existence of section 150(2) of the Financial Services and Markets Act 2000 which removes actionability for a breach of the Principles. The Judge found that section 150(2) has the limited effect of preventing a claimant from claiming that a cause of action in a court of law arises from a breach of the Principles; section 150(2) does not alter the function of the Principles in other ways and it does not impact upon the jurisdiction of the Financial Ombudsman Service. The Court rejected the submission that the FSA’s use of its general powers in this instance was unlawful in light of its specific power to create a consumer redress scheme under section 404 of the Act.
The case is significant to banks who sold PPI and their customers (with estimates of the cost of the wider compensation package being between £1.1 and around £9 billion). In addition, the judgment is significant to the wider regulation of financial services, clarifying  the obligations which the Principles may impose upon firms in relation to their customers.
 
Counsel for the parties included:
Lord David Pannick QC, Charles Flint QC, Javan Herberg QC and Simon Pritchard for the Claimant
Monica Carss-Frisk QC for the FSA
Michael Fordham QC and Paul Luckhurst for Nemo Personal Finance Ltd, an Interested Party