Tag Archives: FSA

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???

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.”

PPI still mis-sold, says Which?

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Many people are still being misled into buying payment protection insurance (PPI) to cover their credit card payments, Which? claims.

A survey for the consumers’ association suggests that nearly 10 million people have a PPI policy with their cards. But 13% – 1.3 million – bought it under the mistaken belief it was compulsory or would improve their chances of having their card application approved.

Which? said people were wasting their money buying any form of PPI policy.

“Credit card PPI is a modern day snake oil – it’s a useless product, expensive and poorly designed,” said Doug Taylor of Which?

“In this time of economic uncertainty, people are effectively throwing away £970 million each year, when they should be encouraged to seek independent financial advice about protecting their finances as a whole,” he added.

This was rejected by the British Bankers Association (BBA), who said the insurance was a valuable “plan B”.

“Taking out PPI is not a condition for agreeing to provide the borrowing facility and people are free to shop around if they want to,” a BBA spokesperson said.

“Last year, a mystery shopping exercise carried out by the FSA showed improvements in staff making it clear to customers that cover is optional and new rules which came into force in July tighten the PPI regime even further,” the spokesperson added.

PPI is designed to ensure that people can still repay their loans, such as credit card payments or mortgages, if they fall ill or become unemployed.

Criticism

Consumer bodies such as Which? and Citizens Advice have long campaigned against the selling of PPI, describing it as little more than a protection racket run by the banks to boost their profits. In June this year the Competition Commission calculated that customers were being overcharged for the insurance policies each year because of a lack of competition at the point of sale.

Meanwhile the main financial regulator, the Financial Services Authority (FSA), has fined 11 financial organisations in the past two years for mis-selling the insurance.

The most high-profile example was that of the Liverpool Victoria friendly society – now called LV – which was fined £840,000 earlier this year. Its staff had tagged on the cost of PPI insurance to the quotes it gave to 14,500 customers who had asked for personal loans – but without telling them it was doing this.

The Office of Fair Trading (OFT) has also criticised PPI policies for frequently exaggerating the level of cover on offer.

Survey

Despite the barrage of bad publicity over the past few years, and the increased regulatory scrutiny, PPI polices are still widely sold. Cover for credit cards repayments is the second most common form of PPI. Which?’s survey of 2000 adults in the UK found that 32% of those with credit cards had also bought a PPI policy as well. Of those, 13% said they believed that taking the cover was a condition of being given the card, or that their card application was more likely to succeed if they did so.