Category Archives: Industry News

Are banks stalling paybacks of mis-sold PPI?

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Payment Protection Insurance (PPI) is charged by banks in case a customer defaults on loans, mortgages or credit cards such as in cases of redundancy.  Thousands of cases have arisen where customers have been mis-sold PPI and have initiated cases to reclaim monies lost.  Current events indicate that banks may be stalling in PPI compensation payouts.

Complaints about banks to Financial Ombudsman Service (FOS) rise

Complaints to FOS about the improper handling of mis-sold PPI claims have nearly doubled to 85,562 during the first six months of 2012, an increase of approximately 75 per cent when compared to 49,419 in the final six months of 2011, but similar to the first half of 2011.

During 2011, regulators gave banks more time to assess claims for PPI compensation.  With banks having more time to assess claims, some commentators are suggesting that they may have stalled the claim process.  The fact that FOS has decided about 72 per cent of PPI complaints in the customer’s favour indicates that banks may have stalled the payback process too.

The complaints were about banks’ use of technical claim forms, turning away valid complaints, poor claims handling and stalling payments.  The most complaints were about Barclays followed by Lloyds TSB, MBNA, Lloyds TSB Black Horse, Capital One and HSBC.

Changes in banks’ PPI responsibilities

The authorities have reviewed the conduct of parties involved on behalf of consumers trying to reclaim PPI.  The result is that banks have been given a deadline by which to process PPI claims and improve their complaints handling.  The fact that the FSA have given such a deadline may also indicate that banks have taken longer than they should have in processing PPI claims.

Banks have raised alerts about fraudulent claims for PPI mis-selling.  Out of approximately 3,000 PPI complaint calls to FOS daily, half are investigated by the Ombudsman.  Some cases have been in the favour of banks.  Yorkshire Building Society, for example, has won 93 per cent of cases.

Investigating claims and fraudulent activity takes time.  This factor may contribute to a delay in banks processing mis-sold PPI.  The appeals by banks to avoid the large payments of compensation to so many consumers also delays payouts.

Self-claim versus use of claim management companies

Claim management companies use intensive marketing to encourage people to reclaim PPI that may have been mis-sold to them.  These companies act as an agent or middle-man and take a large proportion of the PPI compensation claims and may potentially slow down the PPI claims process.

Since last year, consumers have received more information through the media about PPI, how to identify PPI mis-selling, and steps to take in order to claim.  The spike in complaints and self-representation may be due to consumers having more knowledge about PPI and the claims process, who are therefore coming forward to make their own cases.

A simpler claims process with easier forms to complete may add to consumers being able to handle claims themselves.  Self-representation for claiming PPI, or complaining about how claims are processed, saves consumers the fees charged by the claims management companies.

New rules surrounding PPI selling

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At the beginning of the new tax year, April 6 2011, new rules came into force governing the selling of Payment Protection Insurance (PPI).  The headline ruling is a ban on ‘point-of-sale’ selling, meaning that PPI cannot be sold at the same time as a loan or credit agreement is made.

The new ruling from the Competition Commission means that the type of insurance which covers sickness, unemployment or accident can only be sold seven days after the agreement for a credit card, personal loan or mortgage.  There must also be a seven-day period between the issuing of a PPI quote and its sale.  Customers will then be given a separate quotation.  This should put an end to the mis-selling of PPI which resulted in thousands of PPI claims.  These ‘cooling-off’ periods are commonplace in credit agreements, but until now have not included PPI.

Now, anyone wishing to buy mortgage protection insurance will be made to wait at least 24 hours before purchase of the cover, and the company will have to wait seven days before even issuing a quote.  Unsurprisingly, some providers were failing to tell their customers about certain aspects of the cover, resulting in many of them having to reclaim PPI, and this part of the ruling is a response to this.

These rules will come as a welcome relief to anyone using credit in the UK, but too late for anyone who has been mis-sold PPI.  Borrowers now taking out new credit agreements but who choose to take out PPI will be sent an annual review, detailing the cost and reminding borrowers of their right to cancel.  Although, after action from the Financial Services Authority, most lenders have ceased selling single premium policies, these will now be banned anyway.  Single premium policies were a way of selling PPI where the whole-term cost of the insurance cover was added at the beginning of the loan, which meant that the borrower was paying interest on their insurance along with their loan interest.

There will be an obligation to include information about PPI in all literature, and make clear the message that PPI is not mandatory and that, if wished, it can be obtained from other sources than the lender.  The financial institution will also be obliged to provide every borrower a separate PPI quotation that gives full details of the cover.

Since the scandal broke in 2008, customers have understandably been reluctant to take out PPI cover, especially those who believe they are entitled to PPI compensation from mis-selling in the past.  The new ruling should go a long way to reassuring customers that nothing is being hidden from them.  However, there will always be unscrupulous lenders, or those looking for a way round the rules, so the new ruling does not mean that borrowers should take their eyes off the ball.  It is essential for buyers of any financial product to know their rights, be armed with the right questions and know the right answers.

Banks allocate further funds to the ppi claims process

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Following the huge increase in PPI claims over the last year and since the judicial review, many of the big banks and indeed some of the smaller firms have been forced to allocate further funds to the cause of compensating consumers who were mis sold PPI.

It seems that the banks grossly underestimated the volumes of complaints from consumers and have, as a result allocated huge piles of money for compensation.

Barclays bank have set aside an additional £300 million towards the payment of mis sold ppi, which adds to the already large sum of £1 billion.

Industry experts believe that across all the major banks there is approximately £6 billion owed back to consumers. If you then add in all the smaller firms and financial institutions that figures jumps to around £9-10 billion.

Lloyds allocates £3.2 Billion to missold PPI Claims

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Lloyds Banking Group confirmed first half losses this year after it allocated a whopping £3.2bn to tackle the PPI claims scandal.

Comparing to a £1.3bn profit last year Lloyds have reported a £3.3bn pre-tax loss in the six months to June.

Putting aside the allocation of money compensating for missold PPI, the bank has seen underlying profits drop to £1.1bn (to 31%), due in part to the economic downturn across the country.

Barclays has also allocated a substantial fund of £1bn towards paying out compensation for ppi claims.

This all points in the right direction for consumers who have waited a long time for the recent judicial review to complete. We will now start to see movement across the board with lenders under strict instruction from the FSA (Financial Services Authority) to deal with their backlog of cases by 31st August 2011. Following this date we will see claims being processed on a case-by-case basis, but the overall wait time should significantly reduce.

If you think you have been missold ppi and you want to make a claim use our online ppi claim form or call us on the phone number at the top of the page. We offer a strict NO WIN NO FEE service with no hidden charges and no upfront fees. It wont cost you anything to find out if you have a ppi claim.

FSA extends time limit for PPI complaints

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The FSA (Financial Services Authority) have brought into effect a temporary ruling that says PPI claims now have more time in which to refer their cases to the FOS (Financial Ombudsman Service). This rule was already in effect but was due this month. They have simply postponed it for 6 months until 27th October 2010. However this is only for PPI complainants who have been sent a final response letter from the PPI provider between the 28th November 2009 and 28th April 2010 inclusive.

The Financial Services Authority have said that they are working on a longer term solution to ensure consumers are treated fairly when making complaints about PPI issues.

The FOS have revealed in their latest annual report that PPI claims account for over 30% of new cases, in the year ending March 2010.

They have dealt with nearly 50,000 PPI complaints compared with just over 31,000 the previous year. While a small proportion of cases related to PPI claims, most of the them involved complaints about the sale of Payment Protection Insurance.

Missold PPI is now a major industry in the UK, with many people submitting PPI claims in order to seek compensation.

If you have taken out a loan, mortgage or credit card since 2004, and you think you were sold PPI, then get in touch with us using the phone number above. Alternatively use our online PPI claim form and we will do the rest for you. It costs nothing to find out if you have a claim and we work on a NO WIN NO FEE service. What are you waiting for???

Ban on sale of PPI might go ahead

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Plans to restrict the selling of Payment Protection Insurance might go ahead. within the next few months.

The Competition Commission want to ban the sale of PPI at the time loans and credit cards are sold. The main reason for this is because historically it was the main time where PPI has been missold to consumers.

The Commission has said that this proposal will give consumers more time to make up their mind, as to whether they want to purchase PPI with the lender of their new loan, or whether they even want it at all. The decision is provisional and is open to consultation. The final verdict will come around July 2010.

Barclays have said that PPI is a very useful product to the lender.

The main issue here is that more borrowers will walk away unprotected, and in these uncertain times, this probably isn’t a good thing. However, being missold PPI, obviously isn’t good either.

The mis-selling of Payment Protection Insurance has been going on for some time. Consumers generally have been unaware that this insurance was optional, or that they have the option of shopping around. Many lenders used aggressive selling techniques, mainly because the profit margins on these particular types of products were very high.

PPI claims are on the rise, and we expect them to come to a head some time in 2013. Claiming back missold PPI premiums is your right. The sale of PPI has been dubbed a “protection racket” by some Consumer Groups.

If you have been sold PPI in the past 10 years, make sure to use our ppi claim form here at reclaimyourmoney.com.

Competition Commission restricts sale of PPI

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Consumers were declared a victory recently as PPI (Payment Protection Insurance) was banned from being sold at the same time as credit products like personal loans or credit cards.

The Competition Commission concluded, after a 2 year investigation, that lenders have the upper hand when selling PPI with loans or credit cards. This results in an unfair and uncompetitive market where you as the consumer ends up being over charged.

The Commission ordered banks and lenders that they must wait a full week before trying to sell PPI, after having sold a loan or credit offer to a borrower. Also prohibited is the Single Premium variety of PPI. This is where the total cost of the insurance is added to the debt therefore dragging the payments out over the full term and of course incurring interest charges on this money.

Peter Davis, Competition Commission, said: “The ‘point-of-sale’ advantage has meant that leading providers have faced little competition for PPI and, as a result, have charged persistently high prices. Allowing the current short comings to continue unchecked would be damaging to consumers.”

They hope that the new 7 day cooling off period will encourage the borrower to shop around for the best insurance available. The Competition Commission also ordered lenders to send personalised PPI quotes and Annual statements to customers.

PPI covers repayments on credit products, like loans or credit cards, if the borrower is unable to pay due to illness, accident or unemployment. Lobbiests say that the insurance is too expensive, and has had to many exclusions in the past. It has also been frequently mis-sold to customer who would never have been able to make a claim due to pre-existing medical conditions, or other factors which should have been discussed at the point-of-sale.

Louise Hanson of Which? said: “For too long too many consumers have suffered from shoddy, expensive and inadequate protection. It’s a great shame that since we began campaigning for better products, many people have wasted millions of pounds on PPI.”

However, a spokesman for the British Bankers Association said that loan cover was more important than ever for consumers during the economic downturn: “As two million people approach unemployment it is totally without conscience to encourage people to borrow without back up. The Competition Commission has gone well beyond its remit. This is an irresponsible decision exposing vulnerable customers to economic difficulty when they may need help most.”

The FSA, or Financial Services Authority, has already taken serious action against 19 firms over mis-sold PPI policies since September 2006. These companies include Egg, Capital One & Alliance & Leicester. This was mainly for selling the product without explaining the cost breakdown or exclusions, or selling the product aggressively.

Adding PPI to a loan over £8,000 would potential cost over £3,000, but many people, including the self-employed or those aged over 65, would be unable to claim. In one example, a couple borrowed over £50,000 and were persuaded to take out a PPI policy at a total cost of over £22,000.

Thousands of PPI policy holders have already reclaimed the costs of their insurance on the basis that they were mis-sold their policy.

“This must carry on; the Commission’s report strengthens the weight of reclaimers call – and everyone who’s ever bought one of these policies should check it to see if they’re due their cash back.”

In 2006 alone, lenders reported profits of over £1.4 billion just from selling PPI.

Cost of mis-sold PPI policies tipped to hit £203m a year ahead of reform

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The cost for insurers to compensate customers who have been missold PPI (Payment Protection Insurance) has doubled to £203,000,000 (£203 million) a year.

The FSA (Financial Services Authority) has provided the updated figure as it extended consultation on PPI reform for six more weeks.

They expect insurers to have to deal with over 400,000 complaints each year, as opposed to the 160,000 initially predicted. The larger number of expected complaints will push-up the overall cost of settling future mis-selling claims from £58m – £80m to possibly as much as £203m per year. Insurers and banks are expected to pay out between £900m & £2.8bn in compensation to existing Payment Protection Insurance holders who have deemed to have been missold their policies.

Payment Protection Insurance allows borrower to keep up debt repayments on their loans, credit cards or mortgages if they lose their income or are otherwise unable to pay due to illness or injury. The issue is that a lot of customers have been sold these expensive policies where the insurer hasn’t properly ascertained the customers needs, including pre-existing medical conditions and employment status. This has resulted in many large companies being fined for mis-selling, and therefore has paved the way for us to Reclaim Your Money. Click here to submit a claim to us and we will get in touch to discuss it.

Regular PPI now just as expensive as single PPI

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The FSA had insisted that all lenders stop selling single premium PPI by the end of May ahead of the Competition Commission ban on the product starting in 2010. However, consumer champion Which? said new research had now found some regular premium PPI with unsecured loans that cost just as much as single premium PPI. For example, taking out a £5,000 Alliance & Leicester loan with regular premium PPI now costs the same as it would have done with single premium PPI in November 2008.

However, unlike single premium PPI, regular premium policies are not added on to the value of the loan so borrowers do not pay interest on them, which should make them cheaper. Although regular premium PPI can be cancelled more easily and should make it easier to switch provider, insurers are free to increase premiums and reduce cover by giving policyholders 30 days’ notice.

Lucy Widenka, personal finance campaigner at Which?, said: “How disappointing that some lenders appear set against offering value-for-money cover. Making regular premium PPI as expensive as single premium PPI makes lenders look as determined to make a certain amount of money from people, whatever they may be selling. To avoid a bad deal, consult an independent financial adviser about your overall financial protection needs and shop around before committing to anything.”

Lenders curb sales of payment protection insurance

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Some of the biggest high-street banks in Britain have stopped selling single premium PPI, ahead of an expected curb on its sale by the Competition Commission.

Despite warnings that it could result in more expensive loans, the Commission is expected to outlaw the sale of single premium policies when it announces its final proposals to clean up PPI sales in the next couple of weeks.

Pre-empting a ban, Alliance & Leicester, Barclays, The Co-operative Bank, Lloyds Banking Group, which includes Lloyds TSB, Halifax and Bank of Scotland, and RBS/Natwest have announced that they will stop selling single premium PPI with unsecured personal loans by the end of this month.

The move was welcomed by Jon Pain, managing director of retail markets at the Financial Services Authority, the City regulator. He said: “We are pleased these firms have stopped selling single premium policies and would expect other firms to notice these developments and review their own positions. A PPI product can be helpful for customers wanting protection on a specific credit agreement as long as the policy is sold appropriately.”

PPI policies cover debt repayments if a borrower cannot work because of accident, sickness or unemployment, but they have been widely mis-sold. The Competition Commission said that sales standards are particularly low for single premium policies, where consumers pay for the insurance upfront. The cost of the PPI is usually added to the loan and interest charged on this amount, significantly increasing the cost.

The Commission recommended a ban on single premium plans in an interim report published in November, where it also suggested that lenders be prevented from contacting a customer about the insurance within 14 days of a credit agreement being signed and called for advertising to be made clearer.

Lenders have warned that the proposed crackdown would force them to push up rates on loans because they would no longer be able to subsidise deals with profits earned from the insurance. Payment protection has been one of the biggest moneyspinners for banks such as Lloyds, Barclays and Alliance & Leicester, worth an estimated £3.5 billion. A huge slice of the profit is expected to be lost if the whole package of measures are approved.

Stephen Sklaroff, director-general of the Finance and Leasing Association, which represents lenders that sell the insurance, said: “Significantly fewer policies will be sold. That will inevitably have an effect on loan rates, possibly pushing up rates by several percentage points.”

But Louise Hanson, head of campaigns at Which?, the consumer group, said that PPI sellers know that they are facing a losing battle.

She said: “These firms have recognised that the party is over for single premium PPI and the rest should follow suit. People need to protect their finances more than ever so providers should be developing products that meet consumers’ needs and offer value for money. PPI has been widely mis-sold in the past so anyone with a personal loan should check if they have a single premium policy as they could claim their money back.”

Which? is using social networking site Facebook to encourage people who think they may have been mis-sold the cover to reclaim their money. It has launched Payback, an application designed to spread awareness of PPI among recent graduates and young professionals who may have been mis-sold a policy when taking out an unsecured loan or credit card.

Peter Jackson, managing director of Lloyds Banking Group, Consumer Banking, said that its decision to stop single premium sales was in direct response to customer research.

He said: “Lloyds TSB customers told us they valued the cover PPI provides but, as the economy moved into uncertain times, now wanted a more flexible product which would make it easier for them to manage their budgets.

“Halifax and Bank of Scotland have also taken the decision to launch a monthly premium payment protection insurance policy. This has been in development over the last few months and will be launched early February 2009.”

The FSA has taken action against 20 firms over poor sales practices involving PPI, including levying its largest ever fine in the retail sector when Alliance & Leicester was ordered to pay £7 million for what the regulatory described as “serious failings” in its telephone PPI sales.