The Financial Services Consumer Panel has condemned the actions of many high street banks for failing to resolve consumer complaints over payment protection insurance (PPI) claims.

A hearing to determine whether changes in complaints handling demanded by the FSA and Financial Ombudsman Service are wrong in law begins in the High Court today.

The Consumer Panel is concerned that financial institutions are using litigation as an excuse to apply a blanket suspension on processing PPI cases leaving many consumers having to wait even longer for compensation.

The British Bankers’ Association (BBA) is asking the court to determine whether the regulators can impose new requirements on firms which go beyond what was stated in the FSA’s own rulebook – specifically those on handling complaints about payment protection insurance (PPI) sales.

Adam Phillips, Chair of the Financial Services Consumer Panel, said: “The Financial Ombudsman has identified tens of thousands of cases of mis-selling. This litigation should not be an excuse for banks to apply a blanket ban on processing claims.