The British Bankers’ Association (BBA) requested a judicial review last October into the FSA’s new set of laws telling banks to look at old complaints and contact people who have been mis-sold PPI.
The FSA has welcomed the dismissal, it says that since it took over regulation of PPI complaints in 2005 there have been 1.5m complaints.
It points out that firms have rejected around 60 per cent of complaints, but the majority that go to the Financial Ombudsman Service are found in the customer’s favour.
A BBA spokesperson said: "We are disappointed with today’s judgement and now need to consider the details of it very carefully as well as next steps, including whether it would be appropriate to apply for permission to appeal."
They added: "All complaints that are directly affected by the judicial review and therefore cannot be decided will continue to be placed on hold until the next steps have been decided."
Martin Lewis, creator of MoneySavingExpert.com, said: "The hold’s not been agreed by the FSA or Ombudsman, who have both lambasted it, and has potentially left 100,000s – each trying to reclaim 1000s – wrongly in limbo and the Ombudsman over-stretched