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Archived PPI News

FCA using psychological insight to crack down on poor financial products and services

30th January 2014. The Financial Conduct Authority's research on behavioural economics revealed that snap financial judgements made by consumers leads firms to compete in a way that is not on the interest of the customer.

The groundbreaking research, which was carried out last year, aimed to gain insights to identify problems before they reach the scale of the payment protection insurance (PPI) scandal, which has so far forced banks to set aside over £18bn to compensate affected customers. It also sought to understand why consumers sometimes make poor financial decisions and how these mistakes can be predicted. The FCA is relying heavily on research by Daniel Kahneman, 2002 Nobel Prize winner for his contribution to economic science and Princeton University professor. His research states we have two ways of thinking - snap judgements for simple actions and reasoning to reach a verdict. However, people often use snap judgements by default as it takes time and energy to apply reason - sometimes leading to thoughtless biases. This means that rather than setting aside time to conduct research into their financial decisions, vulnerable consumers - particularly those who lack financial insight - can be easily rushed into quick decisions by salespeople.

FCA chief executive Martin Wheatley said: "Some errors made by consumers are persistent and predictable. This raises the prospect of firms designing business models that do not focus on competing on price and quality. Behaviour economics enables regulators to intervene in markets more effectively." Source

How is the FCA using behavioural economics to protect vulnerable consumers?

7th January 2014. The Financial Conduct Authority (FCA) has been taking a new approach to cracking down on bad practices within the finance and banking sector, with the regulator leaning on behavioural economics to enforce new policies and rebuild trust. FCA chief executive Martin Wheatley said that behavioural economics "enables regulators to intervene in markets more effectively". Since it takes time and energy to apply reason in order to reach a verdict, vulnerable consumers - for example those lacking financial awareness - are often easily pushed into quick decisions by salespeople. This has led some firms to compete in a way that is not in the interest of consumers.

Mr Wheatley said: "Some errors made by consumers are persistent and predictable. This raises the prospect of firms designing business models that do not focus on competing on price and quality." But how is the FCA actually putting the findings of their behavioural economics research into practice?

Looking out for the customer's interests

The FCA has begun checking the words and headlines employed in sales documents to prevent marketing bias, and are checking product sales to prevent consumers falling victim to over-enthusiastic marketers. The body is keeping an eye on incentives used to promote products, for example the payment protection insurance (PPI) scandal was exacerbated by providers linking policies to cheap mortgages.

Crackdowns on badly structured incentive payments have got underway and sales commissions are also being tackled. It has also levied fines on a number of organisations, including Lloyds Bank for inappropriately incentivising advisers - salespeople were encouraged to sell products by being threatened with a salary reduction if they failed to meet targets. Source

Mis-sold financial products to bump up banks' legal costs by 30% in 2014

9th December 2013. The cost of mis-selling products such as payment protection insurance (PPI) is one of the main drivers of banks' anticipated rise in litigation costs. UK banks have already spent an extra 60% on litigation costs in the last 12 months, but according to Legal Business they are expected to rise by another 30% in the coming year. The expected rise in litigation costs is being attributed to mis-selling costs and regulatory investigations, the report said.

It also pointed to the economic crisis as a contributing factor, with 84% of respondents saying they have had to increase legal budgets as a result. The study noted that increased coordination between regulators in different countries will also bump up legal costs for banks. A series of financial scandals including the Libor-fixing case have attracted the attention of regulators from the UK, Europe, the US and Japan.

PPI costs rise despite fall in claims

The PPI mis-selling scandal, which is expected to be the biggest financial crisis in Britain's history, has seen UK banks and financial institutions fork out billions of pounds to foot the compensation bill. PPI is a type of insurance designed to cover loan repayments if the borrower suddenly cannot work. However, it was widely mis-sold to people who did not need it or were ineligible to make a claim. So far the bill stands at over £18bn. Banks continue to set aside funds despite reports that the PPI scandal has reached its peak - Barclays recently closed down a claims processing centre in Glasgow. Source

Was the economic recovery revealed in the Autumn Statement partially down to PPI compensation?

9th December 2013. The Chancellor presented his eagerly awaited Autumn Statement to Parliament last week, citing positive growth forecasts and describing how the government will continue to support families, help businesses, equip young people with essential skills and secure public finances. The Statement revealed that the economy is currently growing faster than predicted, with growth forecasts in 2013 upgraded from 0.6% to 1.4%. The predictions for next year are similarly optimistic, having been upgraded from 1.8% to 2.4%. As a result, borrowing is set to fall, with this year's total already £9bn less than predicted in March, standing at £111bn. The country is set to borrow £73bn less over the period or £2,500 per household. However, the managing director of Teesside-based automotive parts manufacturer ElringKlinger (GB), Ian Malcolm, has suggested that the foundations of this recovery are unsustainable.

He said: "In terms of growth...there's a feeling that things are getting better. "But I have a view that this is a PPI-led recovery. An awful lot of people are getting cheques in their hands - that's free money to them. It is unsustainable." So far UK banks and financial institutions have set aside over £18bn to compensate those who were mis-sold payment protection insurance (PPI) in what is expected to be Britain's biggest consumer finance scandal. PPI compensation payouts average £2,750 per person and reports show that the cash boost has also helped to send the new car market into overdrive. Source 1, Source 2, Source 3, Source 4

Is the MoJ the best organisation to crack down on PPI claims management firms?

27th November 2013. Chief executives have questioned whether the new powers to fine payment protection insurance (PPI) claims management companies will be most effective in the hands of the Ministry of Justice (MoJ). An amendment to the Financial Services Bill means that from next year it will be illegal to exploit information collected through unsolicited calls and text messages - but some believe the powers would be put to better use elsewhere. While Association of Mortgage Intermediaries chief executive Robert Sinclair welcomed the MoJ's recognition that action needs to be taken to deal with rogue claims management companies (CMCs), he believes the Financial Conduct Authority (FCA) should be at the helm.

He said that the FCA has the necessary staff resources to address the problem and regulate claims firms. "The MoJ is still struggling to provide the people capacity that is needed to deal with the poor conduct we see from some claims firms," he said. He stressed that the way claims firms are regulated "does not extend to holding sufficient capital" and indicated the money may not be available to meet hefty fines. "Therefore, the money may have gone out of the firm before any fine arrives. We are concerned that while the MoJ can levy fines, will there be enough money to meet large fines, and if not, that means there will be less money to invest in enforcement," he continued. Trinity Financial product and communications manager Aaron Strutt also voiced concerns, saying: "It is good news the MoJ has more powers to tackle the issue, but it might be quite hard to target all of them. "I imagine the regulator will have to impose some large fines to send out a sufficient warning to other companies that they will need to start cleaning up their act." Source

New MoJ power to fine rogue CMCs welcomed by brokers

26th November 2013. The new powers granted to the Ministry of Justice (MoJ) to fine payment protection insurance (PPI) claims management firms providing a poor service have been welcomed by brokers. Brokers have said the new powers are long overdue and that they will drastically reduce the amount of time spent dealing with "spurious" claims. Under current regulations, the MoJ only has the power to take enforcement action against companies with substandard practices. However, a new clause included in an amendment to the Financial Services (Banking Reform) Bill makes it illegal for claims management companies (CMCs) to exploit information gathered through unsolicited calls and texts. Most CMCs operate in an ethical fashion - but now any that forgo the new regulations or that provide a bad service will face hefty fines from next year.

Ray Boulger, senior technical manager at independent mortgage experts John Charcol, said: "If this curtails some of the worst abuses in the CMC sector, that clearly will be helpful to brokers in terms of not having to deal with these spurious claims. "The effect will be that brokers should have less instances where they are having to deal with these ambulance-chasers. This is not before its time." Mortgage Centre IFA director Fahim Antoniades agreed the changes will "get the monkey off brokers' backs". However, he suggested that action could have been taken sooner to clamp down on rogue CMCs. "If the Ministry of Justice had been more pro-active, it would have put a stop to this before it all got to this stage," he added. Source 1, Source 2, Source 3, Source 4

Barclays cuts jobs as volume of PPI claims takes a tumble

25th November 2013. Barclays' decision not to renew the lease on the site of its Glasgow payment protection insurance (PPI) claims office will leave 244 people without a job. The falling volume of PPI claims combined with the fact that the lease on the site is due to expire next year prompted the decision not to negotiate a new lease. The move affects 137 full-time and 107 temporary staff, who will be left without a job when the Glasgow office is shut down in March 2014. The bank said that ongoing PPI claims would be handled at other centres around the UK.

Centre has 'fulfilled' its role

A spokesman for Barclays said: "In the last three years, Barclays has invested significantly in resolving PPI cases, including a designated centre in Glasgow. "Over recent months, the volume of PPI cases has fallen and this reduction means the centre's role has been fulfilled, with further PPI cases to be managed through existing support centres. "The lease on this Glasgow site also expires in 2014 and would require a multi-year commitment. Having evaluated all the possible options, we made the decision not to negotiate a new lease." The bank added that it will be working with all affected members of staff to provide access to support and services required, including "possible redeployment options". However, the Unite union said that workers would feel "angry" and "betrayed" by the imminent closure. The union's national officer Dominic Hook said: "Barclays has a duty to the workforce and it must leave no stone unturned in its search to find alternatives to redundancies." Source

Chief financial ombudsman Natalie Ceeney steps down after one million PPI complaints

18th November 2013. As the Financial Ombudsman Service (FOS) deals with its one millionth payment protection insurance (PPI) complaint, chief ombudsman Natalie Ceeney has announced she is resigning from her role. Ms Ceeney has spent almost four years tackling UK banks' poor complaints handling processes when it comes to compensating - or not - customers who have been mis-sold PPI. She will be temporarily replaced by deputy chief ombudsman Tony Boorman, who will head up the service until further notice.

Nicholas Montagu, chairman of the ombudsman, said: "Having just received our millionth new PPI complaint, Natalie feels that now is the time for her to move on - as the ombudsman service itself starts out on a new set of challenges, building on the foundations for change laid under Natalie's leadership." Complaints brought to the FOS after banks turned customers away have increased steadily by the quarter, rising from 32,000 in Q2 2012 to 132,000 in Q2 2013.

While the volume of complaints remains on an enormous scale, the figures reveal the peak was reached in Q4 2012, when 145,000 new complaints were brought to the FOS. Grievances are expected to continue to fall over the coming months, although the ombudsman warned in July the volumes are still "huge". The ongoing PPI scandal - expected to be the biggest consumer finance scandal ever - has seen the ombudsman treble in size in order to accommodate thousands upon thousands of complaints, many of which were valid but had been rejected by the banks. Source

Sir Hector Sants quits clean-up role at Barclays after being signed off for stress

18th November 2013. It seems picking up the pieces in the aftermath of the various financial scandals plaguing the UK's banking sector has taken its toll on those in high profile positions. Sir Hector Sants, who joined Barclays last year as part of chief executive Antony Jenkins' plan to restore the bank's reputation, has quit his role just weeks after being signed off with stress and exhaustion. Barclays said in a statement: "Hector Sants has been on sick leave since the beginning of October, suffering from stress and exhaustion.

"He has concluded that he will not be able to return to work in the near term. Consequently he has decided to resign from Barclays and not return from sick leave." Sants, 57, was hired to clean up Barclays' image and transform it into the 'go to' bank following its £291mn fine for its part in the Libor rigging scandal. The bank has also set aside £4bn to compensate customers who were mis-sold payment protection insurance (PPI) and a regulatory inquiry is being made into foreign exchange trading.

This follows the news from the end of last week that chief ombudsman Natalie Ceeney is stepping down from her role as head of the Financial Ombudsman Service (FOS) as the organisation handles its one-millionth complaint. Along with a number of other UK banks, Barclays has played a leading role in rejecting customers' PPI claims, forcing them to take these to the FOS. Source 1, Source 2, Source 3

Total PPI compensation bill set to exceed £20bn

13th November 2013. Banks and financial institutions across the country are already footing a whopping £17bn bill to compensate customers who were mis-sold payment protection insurance (PPI), but estimates show that the overall total could be in excess of £20bn. The scale of the scandal, which is estimated to be the biggest of its kind in history, has been laid bare over the past few years, with the volume of complaints soaring to unprecedented levels and banks continuing to top up their PPI compensation funds.

Lloyds alone has set aside almost half of the estimated total compensation pot. It announced plans to add another £750mn in its third quarter financial results, taking their share up to a staggering £8bn. RBS has also made extra provisions of £250mn, taking the bank's total PPI compensation funds up to £2.6bn. For this reason and the torrent of complaints that continue to flood banks, financial institutions and the Financial Ombudsman Service (FOS), it is now a certainty that the total bill will surpass the £20bn mark.

To put this into perspective, this is equivalent to more than £500 for every man and woman of working age in the UK. The figures surrounding the country-wide scandal continue to climb despite reports that it has reached its peak. The Financial Conduct Authority (FCA) published figures a few weeks ago that suggested the worst was over and Lloyds stated in its third quarter financial results that complaint volumes were starting to tail off. However, the bank still received an average of 11,000 complaints a week over the three month period and PPI provisions continue to surprise analysts. Source 1, Source 2, Source 3, Source 4

RBS injects £250mn into PPI compensation fund

12th November 2013. The payment protection insurance (PPI) compensation pot continues to grow as the Royal Bank of Scotland (RBS) announce they have added another £250mn to foot the bill following the country-wide financial scandal. This means that the bank's total PPI provisions to compensate those mis-sold the insurance now stands at £2.6bn, a significant proportion of the £16bn set aside by the banks for this purpose. The announcement came as RBS announced its third quarter financial results. £1.9bn of the snowballing bill had already been paid out as compensation to affected customers as of 30 September 2013.

Prior to the £250mn injection, the bank said that £2.3bn of the total PPI compensation fund went towards redress while £300mn went on administrative expenses. "The remaining provision provides coverage for approximately 10 months for redress and administrative expenses, based on the current average monthly utilisation," said RBS in a statement. The bank also hinted the compensation bill could increase even further, saying: "There are uncertainties as to the eventual cost of redress which will depend on actual complaint volumes, take up and uphold rates and average redress costs.

"Assumptions relating to these are inherently uncertain and the ultimate financial impact may be different than the amount provided. The group will continue to monitor the position closely and refresh its assumptions." This follows an announcement by Lloyds Banking Group that they have set aside an extra £750mn for the PPI compensation pot, pushing their total share of the £16bn bill up to a staggering £8bn. Source 1, Source 2, Source 3, Source 4

PPI and Libor scandals pushing financial services towards a "fairer system"

29th October 2013. The chief executive of the Financial Conduct Authority (FCA) said at a recent conference that financial firms should "do the right thing" whether the regulators were watching or not. Speaking at the London-based British Bankers' Association Annual International Conference, Martin Wheatley argued that the industry was moving towards a "fairer system" in the aftermath of various scandals such as PPI and Libor. The regulatory system is beginning to place "far more emphasis on good judgement and less on narrow compliance within a set of rules", he stated. He said: "The dominant theme of 21st century financial services is fast turning out to be a complicated question of fairness." He added that the industry needs to react to the public's distrust of the financial services industry - something which was highlighted in a recent survey.

In a Populus poll conducted over the weekend, banks scored a positive rating of just 39 out of 100. Tobacco and payday loan companies as well as energy firms also ranked poorly.

Looking ahead

Mr Wheatley also stressed that the industry needs to look ahead more effectively in order to prevent similar scandals and financial crises in the future, stating that issues must be anticipated before they turn into multi-billion pound problems. Jason Witcombe, director at London-based Evolve Financial Planning, welcomed his observations. He said: "The forward-looking approach that he stressed would be very welcome, as perhaps this has not been as it should have been in the past." He added that Mr Wheatley's suggestion regarding "monitoring of unusual revenue patterns would also be a good thing". Source 1, Source 2, Source 3, Source 4

Nuisance calls leave 3.2 million people scared to answer the phone

29th October 2013. Some 3.2 million people out of the 45 million who have received unsolicited calls or text messages from businesses are afraid to answer the phone. In addition to making over 3 million people steadfastly refuse to answer the phone, 8.8 million find these marketing calls "stressful". This is according to charity StepChange, which found that 26 million adults - including financially vulnerable people - had been offered high-interest credit such as payday loans via unexpected calls and texts. Separate research by IntaPeople IT Recruitment revealed that 91% of UK consumers have been annoyed by cold sales techniques, with cold sales calls the most infuriating (74%) followed by PPI calls (71%). Labour MP Stella Creasy, shadow minister for competition and consumer affairs, called for regulators to crack down on unwanted marketing calls and texts to provide better protection for consumers.

She said: "Just as you shouldn't be followed if you decide to leave a shop, so you shouldn't be hassled if you've asked a company to stop calling - yet for the millions of consumers who get unsolicited text messages, phone calls or spam emails, the news that companies are flouting schemes like the telephone preference service system will further highlight the current self regulation of this industry isn't good enough. "We know some companies are playing fair, but too many are flouting the rules and causing misery for many as they are plagued by these messages despite their best attempts to stop them." While the majority of PPI claims management companies (CMCs) operate in an ethical manner, there are a few that slip through the net and seek to drum up business via unwanted calls and texts. Source 1, Source 2, Source 3

PPI scandal could have been prevented with monitoring to spot early warning signs

28th October 2013. The chief executive of the Financial Conduct Authority (FCA) has said that the payment protection insurance (PPI) scandal might have been spotted earlier if firms' sources of revenue had been monitored. Speaking at the London-based British Bankers' Association Annual International Conference, Martin Wheatley said that taking such action would have set alarm bells ringing over the high margins in PPI compared with the product's low claims ratio, which stands at around 16% of gross written premiums.

Mr Wheatley stated: "It is important to probe sources of revenue for a firm to provide an early warning for possible misdemeanours." One of the three key themes of his speech included problems with a regulatory framework that was too retrospective. This follows an interview with MoneySavingExpert at the beginning of April - when the FCA took over from the Financial Services Authority (FSA) - in which Mr Wheatley admitted the FSA was "too slow to realise the severity of PPI". Looking ahead to the future

However, he said that this would change as the FCA stepped into its new role. "We're expecting all of our supervisors to be looking ahead as much as they're looking back to where product growth is for firms and so we'll have a signal early on where firms see the profitable areas," he said. He added that the FCA has the legal power to ban a product if they believe it is not or cannot be sold safely. At the recent BBA conference, Mr Wheatley said that the first key element of regulatory architecture is to anticipate issues before they become multi-billion pound problems. Source 1 Source 2

"Shamefully high": Number of PPI cases taken to Ombudsman passes the one million mark

23rd October 2013. The chief ombudsman has hit out at the banks' complaints procedure, calling it "slow and bureaucratic" as figures reveal that over one million people have come to the watchdog with PPI grievances. Consumers have the option to go to the Financial Ombudsman Service (FOS) if their PPI claim has been rejected by the bank. However, complaints procedures at UK banks has been questioned after it emerged that the watchdog found in favour of the customer every seven in ten PPI cases. With 10,000 claims being submitted to the FOS every week, chief ombudsman Natalie Ceeney said it was time for banks and other financial institutions to learn from the high volume of complaints.

She said: "Last year the regulator reported that over five million "complaints" were made about financial businesses. "That's five million comments and observations on the service provided by banks and other financial businesses. This feedback could inform new ways of working, new products, better services, and a new relationship with customers. "But too often, that doesn't happen. These customers' feedback gets subsumed by a complaints infrastructure that's slow [and] bureaucratic." Between July and September the Ombudsman received 143,177 new complaints - a 39% rise on the previous year and 81% of which concerned PPI. Richard Lloyd, executive director of Which?, said: "The number of people turning to the Ombudsman to get PPI redress is still shamefully high. He added that an uphold rate of 70% indicates that some banks are "not dealing with PPI complaints properly and are fobbing off customers who have valid complaints". Source

Drop in new PPI complaints suggests the worst might be over

22nd October 2013. The City regulator recorded the first drop in complaints in three years, with the optimistic figures indicating the PPI scandal might be tailing off. Figures from the Financial Conduct Authority (FCA) revealed that 2.9 million complaints were made between January and June 2013, down 500,000 on the previous six months. This is the first fall since the first half of 2010. The majority of complaints received concerned PPI, but the number of new PPI cases opened in the first half of 2013 was also noticeably lower than previous periods. Just 1.8 million cases were opened compared with the industry peak of 2.2 million complaints received in the previous six months, marking a 17.7% drop.

In addition, 92% of complaints made to financial services firms were dealt with within eight weeks, which is the highest proportion since records began seven years ago. A spokesman for the British Bankers' Association (BBA) said the figures are "encouraging". He continued: "Banks are determined that there will be no repeat of any of the bad practices which caused previous mis-selling in the past and have overhauled incentive structures. Staff are now rewarded for high levels of customer service and not sales volumes." However, the optimistic picture painted by the FCA is not mirrored by the Financial Ombudsman Service (FOS).

The Ombudsman, which intervenes when banks and customers fail to reach an agreement, revealed a 149% jump in PPI complaints between April and September 2013 compared to the same period the year before. Source 1, Source 2, Source 3

Co-operative Bank injects £100mn into PPI compensation pot

21st October 2013. Following revisions on redress for mis-sold payment protection insurance, British lender Co-operative Bank has boosted its compensation pot by over £100mn. The troubled bank has admitted it needs an additional £105mn on top of the £269mn previously set aside to compensate victims of mis-sold PPI.

The revision is due to the increased volumes of customers coming forward with complaints and fresh guidance from the Financial Conduct Authority (FCA) detailing appropriate levels of compensation for affected customers. The new sum takes into account the amount of compensation owed to mortgage customers who were affected by a recently discovered flaw. Some mortgage customers were charged only interest on the first mortgage instalment, which meant that further payments were higher than they should have been.

The top-up also covers the "identification of a technical breach of the Consumer Credit Act", which is thought to involve a failure to inform a number of loan customers that they could reduce their outstanding balance. Despite the sizeable PPI bill, the Co-op Bank is one of the UK's smallest lenders, with 6.5 million customers to its name and a 1.5% share of the current account market. Overall, banks and financial institutions have set aside more than £18bn to cover the cost of what has become the most expensive consumer financial scandal in British history. The policies were designed to protect borrowers in the event of losing their job or being unable to work through sickness, but they were often sold to those who would have been ineligible to claim. Source 1, Source 2, Source 3, Source 4, Source 5

Consumer expectations of financial services rise as PPI complaints continue to flood in

15th October 2013. As the full extent of the payment protection insurance (PPI) mis-selling scandal becomes clearer with every passing day, consumers are expecting financial services to address problems and implement radical changes. In the September edition of Ombudsman News, the chief executive of the Financial Ombudsman Service (FOS) said that expectations had risen among consumers over the past few years. Noting that financial services would have to step up their game, Natalie Ceeney said: "We cannot put that genie back in the bottle." She explained that while consumers had been forced to put up with bad service in the past, the future would be "radically different". "Consumer attitudes have changed, which means that financial businesses' attitudes to customer complaints need to be different too," she said.

Volume of PPI complaints: update

The latest figures from the Financial Conduct Authority (FCA) revealed that while the amount paid out to victims of mis-sold PPI was 15% lower in August than in July, it still ranked as the third highest monthly payout in 2013 so far. Customers were reimbursed £446mn in August 2013 by the 24 firms that account for 96% of complaints. However, this figure marks a dramatic drop from the £612.3mn paid out in June 2012, when compensation levels reached a peak. With the FOS receiving as many as 3,000 PPI complaints a day, Ms Ceeney warned that "many people may be waiting for up to two years to get a decision about their case".Source 1, Source 2

PPI compensation payouts predicted to boost Christmas spend

15th October 2013. Considerable compensation packages for mis-sold payment protection insurance (PPI) are being cited as one of the reasons behind a predicted increase in festive expenditure. Analysts at Verdict have estimated that high street spending on the approach to Christmas will reach a staggering £88.4 billion. Experts have attributed the 2.2% rise in retail spending during the last three months of the year to improving consumer confidence. Online sales are also expected to rise 12% to £11.6 billion.

This is partially due to one-off payments including PPI compensation packages which are being distributed by banks to victims of the mis-selling scandal. Analysts also put it down to positive movements in the housing market and the economy painting a more optimistic picture than previous years.

In addition to one-off PPI payouts, the Royal Mail share flotation is playing a major role, with almost 700,000 ordinary retail investors having witnessed the value of their stakes rise by hundreds of pounds. The report said: "Consumer confidence drives spending and shoppers have far more reasons to be cheerful this year. "The economic news is more positive; the housing market is moving with further initiatives being introduced to encourage buying. "Job creation is outpacing cuts; and though PPI refunds and the Post Office float do not affect everyone they have a further halo effect of boosting the view that at last things are getting better." It added that the Christmas spend would revolve mainly around food, but noted there was likely to be an upturn in furniture, DIY and gardening sales. Source

FOS takes 10 months to reply to PPI complaint submissions

9th October 2013. A mortgage advisor has slammed the PPI complaints handling procedure at the Financial Ombudsman Service (FOS) after he claimed it took the regulator 10 months to respond to his submissions. Ian Broadbent, director of Blue Sky Mortgages, which is based in Lincolnshire, also said that the FOS had requested additional information on the case even though he previously submitted evidence that no PPI cover had been sold to a former mortgage client. The client took out a mortgage with the now-defunct Rooftop Mortgages in 2006 and recently filed a direct PPI claim. After being contacted by the ombudsman following a rejection, Mr Broadbent said he provided the relevant information last December, including the mortgage offer letter clearly stating that the client did not require PPI. But 10 months later he was contacted once again by the ombudsman requesting a mortgage statement and confirmation from his insurance underwriter than no PPI was present on the account.

Mr Broadbent has hit out at the FOS, saying: "Single premium PPI was offered by various insurance underwriters working with a particular lender. "They are not my insurance underwriters. How can anyone expect me to know how or who wrote policies for a now defunct lender and why should I have to chase a firm I have never dealt with to give me a letter stating that I did not sell something?" In response, a spokesman for the FOS said that it received 2,000 PPI complaints a day and that it expected to see relevant evidence from both parties before making a final decision. Source

PPI compensation sends car sales into overdrive in September

8th October 2013. Cars have zoomed into consumer shopping lists all over the country as the boost in income from payment protection insurance (PPI) compensation saw the UK car market enjoy one of its best months since the credit crunch.

Over 400,000 new cars were sold in September, pushing sales up by around 12% and ensuring Britain outperformed its European counterparts. Sales of the September 63 plate were 12.1% higher compared to the same period the year before, and marked the most since March 2008. Mike Hawes of car industry body Society of Motor Manufacturers and Traders (SMMT) said: "The UK car market has had a fantastic September and reflects growing confidence across the economy.

"People have been attracted by new deals and a number of customers have benefited from payment protection insurance mis-selling claims." He noted that September was the 19th consecutive month of steady growth, adding: "With fleet and business demand still to reach pre-recession levels, we believe the performance to be sustainable." With 20,600 Fiestas sold last month, Ford has held onto its coveted position as the UK's top-selling make. Vauxhall's Corsa was hot on its heels in second place.

However, the 403,136 cars registered last month remains below the pre-credit crunch September average of 416,000. So far, Britain's banks and financial institutions have paid out more than £18bn to compensate those who were mis-sold the insurance, with PPI fast becoming Britain's biggest ever consumer financial scandal. Source 1, Source 2

Clydesdale Bank reviewing PPI complaints handling policy after being accused of reducing its compensation bill

7th October 2013. Clydesdale Bank has admitted it is currently in the process of reviewing its payment protection insurance (PPI) complaints handling procedure amid allegations that it destroyed important records. Hundreds of customers have complained that the bank dismissed their PPI claims because their records had been destroyed. Around 450 people with PPI claims said the bank refused their attempts to obtain compensation as the necessary information had been disposed of. According to Herald Scotland, Clydesdale Bank invoked the Data Protection Act when destroying customer records dating back more than seven years.

The Data Protection Act states that information must not be kept for longer than is necessary for the registered purpose. However, concerns have surfaced that the bank may be dramatically reducing its PPI bill by deleting these records. In addition, Clydesdale is the only major bank which says it is unable to provide customer records dating back more than six or seven years. This is according to The Herald, which obtained this information from reputable Scottish claims companies. The potentially reduced PPI compensation bill is not the only reason Clydesdale Bank is coming under fire. Source 1, Source 2, Source 3, Source 4

Major role played in PPI scandal drags Barclays down to lowest rated UK bank

18th September 2013. Britain's banks and other financial institutions may be trying to leave the various scandals that have dominated recent headlines firmly behind them, but it seems their customers aren't so willing to forget. Using research from the Ethical Consumer website, campaign group Move Your Money scored 70 institutions, with Barclays dragging its heels in last position.

The bank scored just four out of 100 points in an assessment that tested honesty, ethics and customer service. A spokesman for Barclays said the bank was "disappointed" by the ranking. He commented: "We work hard to put our customers at the heart of everything we do and have taken active steps to ensure this happens." However, Laura Willoughby, head of Move Your Money, argued that Barclays achieved its very low score due to high volumes of customer complaints, its involvement in Libor fixing and the role it played in the payment protection insurance (PPI) scandal, which is expected to be the biggest consumer financial scandal in history.

She said: "Banks want you to think they have changed. Our scorecard shows that many have not." The institutions were scored on five criteria including customer service, honesty, culture, ethics and impact on the economy. While Lloyds, RBS and HSBC all scored higher than Barclays, all four were awarded a 'red' rating from Move your Money and current account customers have since been urged to switch to other banks and building societies. Source

Banks wrongly receive the blame for PPI complaint mis-handling, says BBA spokesman

17th September 2013. Following the launch of an investigation into the way banks deal with PPI complaints, a spokesman for the British Bankers' Association has argued that it is claims management companies who are to blame for the hold up. After figures surfaced revealing that 86% of PPI complaints taken to the Financial Ombudsman Service (FOS) after being rejected by Lloyds were upheld, the Financial Conduct Authority (FCA) announced that two financial institutions had been referred to enforcement. However, a BBA spokesman argued that banks were "continuing to improve their systems" and that the complaints process is being hindered by a handful of claims management companies (CMCs).

He said: "All banks have hired more staff to deal with the large numbers of complaints on this issue, but unfortunately the actions of some unscrupulous CMCs who refer huge numbers of complaints to the ombudsman, whether there are grounds to or not, mean that the system is being clogged up and that people with genuine complaints don't always get the service they deserve." However, chief ombudsman Natalie Ceeney has commented in the past that customers are turning to CMCs because banks are taking too long to respond to complaints. She has also pointed the finger at banks for shifting valid complaints across to the FOS and delaying the compensation process by a matter of months. Source

"We will take more enforcement action": FCA's warning to banks over PPI complaint mishandling

16th September 2013. Following the news that as many as 86% of payment protection insurance complaints shifted from banks to the Ombudsman have been upheld, the Financial Conduct Authority (FCA) is taking strong action to crack down on unscrupulous financial institutions.

The FCA recently announced that two more financial institutions have been referred to enforcement over their approach to PPI complaints and stated that the ensuing recommendations will be published in the second quarter of next year. The organisation claimed complaint handling at a number of major banks and building societies "isn't working" after figures surfaced which revealed that 86% of complaints rejected by Lloyds Banking Group were upheld by the Financial Ombudsman Service (FOS). Commenting on the launch of the thematic review, chief executive of the FCA, Martin Wheatley, said: "We have got two large investigations underway and we have completed two where we have levied quite strong fines.

"We have been working very hard to look at bank complaints handling. We have taken enforcement action, and we will take more enforcement action and continue to pressure how banks handle complaints through our ongoing supervision and thematic work." The Co-operative Bank was fined £113,000 back in January after failing to treat customers fairly over PPI compensation and Lloyds Banking Group was fined £4.3 million the following month after being accused of delaying PPI compensation payouts. Banking consultant Mehrdad Yousefi said: "Banks' complaints handling has worsened thanks to the rise in PPI claims, the lack of banking competition, insufficient customer service resources, and a lack of trust in banks generally, which in turn triggers more complaints." Source

FCA to investigate two banks over "outrageous" volumes of PPI claims rejections

11th September 2013. The Financial Ombudsman Service (FOS) has published some shocking figures in the past few months showing that they are upholding as many as 80% of PPI claims originally rejected by banks - and now the Financial Conduct Authority (FCA) has stepped up by confirming a series of investigations into the matter. Payment protection insurance (PPI) is a type of insurance that was sold alongside credit cards and loans by banks and financial institutions. However, many customers were ripped off in the sense that they would have been unable to claim on it or did not actually need the cover in the first place.

Chief executive of the FCA, Martin Wheatley, said that two "large" investigations are currently underway, but refused to name the banks in question. He said that the number of legitimate PPI cases rejected by banks was "absolutely not acceptable" and told a committee of MPs that the FCA will "take more enforcement actions" against complaint mis-handling.

The Financial Ombudsman, which deals with complaints that have been turned down by banks, has found in favour of the customer in more than eight in ten complaints made against certain institutions, highlighting that banks are routinely shifting legitimate cases across to the FOS. Mr Wheatley described the figures as "outrageous". He added that the mis-handling of complaints at Lloyds, which were exposed by an undercover reporter for The Times back in June, had "not gone unnoticed". Source

PPI drives growth in UK jobs market

10th September 2013. The widespread payment protection insurance (PPI) scandal has helped to secure the most positive outlook for employment in the UK for six years. Around 20,000 jobs have already been created by the big banks to deal with customer PPI claims and thousands more by the hundreds of claims management firms (CMCs) that have sprung up in the wake of the scandal. This is according to recruitment firm Manpower, which believes that banks will need to recruit a great deal more staff to manage the vast volumes of PPI claims that continue to flood in. This dramatic rise in jobs has fuelled positive growth in the UK labour market, with 16% of finance and business employers alone planning to recruit staff.

Overall, 6% of employers expect to create jobs in the next three months, compared with 5% in the previous survey. By the end of 2013, the outlook for employment in Great Britain stands to be the best for six years. In his keynote speech on the economy yesterday (September 9), Chancellor George Osborne said that the economy is "turning a corner".

He said that since the end of the recession, the UK has grown by 4.3%, highlighting that this is more than the eurozone. "At the same time the labour market has performed much better than expected," he continued. "Employment has grown extremely strongly - more so than even the most optimistic forecasts, with over 1.3 million net new jobs created in the last three years. "Indeed, employment is now above its pre-recession peak in the UK." Source 1, Source 2, Source 3

TSB launches as "completely clean bank" untainted by PPI mis-selling scandal

9th September 2013. TSB has erased all links with Lloyds Banking Group as it launched as a "completely clean" standalone bank. TSB disappeared 18 years ago when it merged with Lloyds, but is now set to become the UK's eighth biggest high street bank after shaking off the troubled bank and re-launching as a standalone institution. Lloyds chief executive Antonio Horta-Osorio highlighted that TSB was not tarred with the same brush as the other high street banks, which have been rocked by considerable turbulence threatening the financial sector in the past few years.

He described it as a "completely clean bank" and indeed, TSB is not weighed down with claims concerning the payment protection insurance (PPI) mis-selling scandal like Lloyds, which played a major role in what has been called the biggest consumer finance scandal in history.

TSB is also not associated with complex interest rate swap products and is free of the toxic assets which came from Lloyds' acquisition of HBOS at the peak of the economic crisis, resulting in the 39% state-owned bank being bailed out by the taxpayer. Erasing all links with Lloyds completely, the black horse emblem has been replaced with a new TSB logo featuring white lettering across blue circles. Mr Horta-Osorio added that TSB will be a "real challenger on the high street".

TSB will have offices in Birmingham, Gloucester, Edinburgh, London and Bristol and call centres in Swansea, Sunderland, Edinburgh and Gloucester, collectively staffed by 8,000 people. Source

FCA confirms investigation into PPI complaint handling

4th September 2013. With figures published earlier this week revealing that the Ombudsman found in favour of 90% of customers bringing rejected PPI complaints against Lloyds Banking Group, the Financial Conduct Authority (FCA) has announced it will conduct a review into complaint handling. Hundreds of thousands of customers have been left with no other option than to take their PPI claim to the financial ombudsman after banks rejected complaints or severely delayed compensation. In a speech to the Building Societies Association, director of the FCA's mortgage and consumer lending subdivision, Linda Woodall, said: "The amount of complaints that go to the ombudsman suggests that something isn't working in the way in which firms manage and investigate customers' complaints." As many as nine out of 10 PPI complaints against Lloyds - and its various forms including Halifax and Bank of Scotland - were upheld, compared with nine out of 10 complaints concerning Nationwide Building Society which were found against the customer. In theory however, both Lloyds and Nationwide should be working to identical guidance from the FCA about how to handle PPI complaints. Both financial institutions also have the same regulatory duty to treat customers fairly. This suggests that some banks are using the ombudsman as a convenient place to 'dump' the thousands of complaints that are still flooding in from victims of the mis-selling scandal. There have also been some suggestions that banks believe people will drop their claim if it is rejected the first time round. Ms Woodall said the review will "identify why complaint handling is not working well for some consumers and address poor practice". She added: "We are hopeful that this will lead to a reduction in the number of customers requiring the services of the Ombudsman." Source 1, Source 2, Source 3

PPI complaints to ombudsman soar as banks continue to deny or delay payment

3rd September 2013. Claims from the banking industry that the volume of PPI compensation claims is starting to slow down have been challenged as new figures show that a whopping 86% of all new complaints made to the financial ombudsman in the first six months of the year were about the mis-sold insurance. A total of 266,228 complaints were made in the first half of this year, marking a 26% rise in the number of PPI complaints to the ombudsman in the previous six months. The ombudsman, which has accused some financial institutions of taking too much time to resolve PPI claims, is often left to deal with cases if banks do not reach an agreement with the customer.

Chief ombudsman Natalie Ceeney said: "Disappointingly we are still seeing cases where businesses are not following our long-standing approach to PPI, resulting in long waits and unnecessary delays for consumers." Some banks and building societies have been dealing with complaints more justly than others, with the ombudsman finding in favour of just 7% of Nationwide customers while upholding a staggering 90% of complaints declined by Lloyds TSB. Lloyds Banking Group's customer service director, Martin Dodd, said: "The group continues to proactively manage the issue of PPI complaints in order that customers can receive redress if they have been mis-sold. "This is an ongoing process and we will continue to review all claims in an in-depth manner that produces fair outcomes for customers." Source

40% of PPI cold calls interrupt meetings, presentations and family meals

2nd September 2013. Phone calls, texts and automated messages concerning payment protection insurance (PPI) are disrupting work and family life according to a recent survey. According to the Citizens Advice Bureau, just over a quarter of people (27%) received their latest PPI call while sitting down for a meal with the family and 14% received a call at work, some in the midst of meetings and presentations. Around 30 million people have been disturbed by a small number of PPI claims firms which seek to drum up business through unwanted contact with potential customers. Over 90% of the 5,682 people surveyed were contacted by a telephone call, 40% received automated messages to landlines and 35% got a text to their mobiles.

Overall, two thirds of British adults have received messages regarding PPI and 98% of these did not give their consent to be contacted. Citizens Advice chief executive Gillian Guy called for a ban on cold calls from financial services firms. "Nuisance calls aren't just irritating, they're often a sign that the service on offer isn't very good or is actually a scam," she said. Source 1, Source 2

Mis-sold credit card protection debacle dubbed the new PPI scandal

28th August 2013. Thirteen banks have set aside £1.3 billion worth of compensation to redress the seven million people affected by a fresh mis-selling scandal involving credit card protection. A report in The Guardian revealed that Britain's high street banks are currently caught up in yet another mis-selling scandal as they try to rebuild their reputation and restore consumer faith following a raft of mis-sold PPI policies. A total of 13 banks and building societies, including Barclays, Royal Bank of Scotland and HSBC, are set to pay out the sum to seven million customers who purchased credit card and identity theft protection policies from card insurance specialist CPP. Around 4.4 million policies designed to 'protect' against credit card fraud and identity theft were taken out and 19 million renewed between 2005 and 2011. However, card issuers already provide this protection for free, which explains why only 0.5% of people with policies from CPP have made a claim.

Average payouts are expected to stand at £185 per person. This week CPP will be writing directly to customers it believes might be entitled to a claim, and with the high volume of policies bought in the six year period racking up a gross profit of £354 million, there will be a hefty bill to foot. News of the credit card protection scandal thwarts recent efforts to restore faith in the UK's high street banks, which has included hiring new staff to implement the clean-up in the broken banking culture. Source 1, Source 2, Source 3

The 'new PPI' - how did the credit card protection scandal come about?

28th August 2013. Faith in British banks is at an all-time low, and with the rigging of Libor and the rampant mis-selling of PPI policies, it is not difficult to understand why. Banks are keen to give the impression they are doing what they can to fix this broken banking culture, but their efforts are being thwarted by a series of incidents. For example, an undercover investigation at Lloyds found major problems in its PPI complaint handling procedure and the Ombudsman is still finding in favour of customers who have had claims rejected by banks. And now news of a credit card fraud and identity theft protection scam has surfaced, with the media flagging it as the new PPI.

Thirteen financial institutions, including state-owned Royal Bank of Scotland, have earmarked £1.3bn to compensate seven million customers who took out the product from CPP Group, a York-based life assistance company. Instead of getting through to their bank when trying to activate bank cards, customers came into contact with a sales person at CPP, who tried to sell one of two products under investigation. The first insured customers for up to £100,000 in the event their cards were stolen and cost £30, despite the fact banks already covered them for free. The second was an identity theft product costing £90.

Between January 2005 and March 2011, £354mn gross profit was generated after 4.4 million policies were sold. Around 18.7 policies were also renewed, raking in £656mn and further ramping up the compensation bill. According to the Financial Conduct Authority (FCA), customer compensation could average around £300. While this isn't on the same scale as the PPI scandal, the idea behind it is fundamentally the same and could prove a hindrance in the race to recoup customer trust. Source 1, Source 2, Source 3

Banking industry "unlikely ever to be the same again"

21st August 2013. Barclays struggles to shake tarnished reputation as it still receives 1,500 PPI complaints every day After Barclays bank ramped up its provisions for payment protection insurance (PPI) compensation payouts last month, the bank hoped this would bring the mis-selling scandal to a close.

However, hopes have been dashed as figures reveal that Barclays is still receiving in excess of 1,500 complaints every single day about the mis-sold insurance. In the first half of this year alone the bank received 285,000 complaints regarding "general insurance and pure protection" with most of these concerning PPI.

While this represented a 1% decrease compared to the second half of 2012, the figure is still an incredible 287% higher than it was two years ago. Barclays set aside a further £1.35bn for its PPI compensation pot last month in the hope that this would draw a line under the saga, but the freshly uncovered figures suggest it is struggling to shake its reputation as the UK's most complained about bank. A Barclays statement said: "Barclays has not sold PPI for several years, therefore complaints about PPI reflect mistakes made some time ago, rather than a reflection of current performance." However, the number of PPI complaints the bank has upheld has increased from 65% in the final half of 2012 to 68% in the first six months of this year.

The Financial Ombudsman Service (FOS), which has been snowed under with cases, found in favour of three-quarters of Barclays customers who were originally turned away by the bank and forced to take their complaint to the Ombudsman.Source 1, Source 2

Banking industry "unlikely ever to be the same again"

20th August 2013. The reputation of UK banks has suffered a blow in the past few years, with customer confidence still at an all-time low after the likes of the payment protection insurance (PPI) scandal and the rigging of Libor. With problems rife in the industry, banks have had to face up to their mistakes and implement a few changes to improve the banking culture and restore customer faith. The industry has undergone such a drastic transformation that KPMG has said in a new report that bank business models are "unlikely ever to be the same again".

One of the big changes is a shift in leadership. Between 2006 and 2012, more than 75% of non-executive directors and 72% of executive management have been replaced at the five major UK banks (Barclays, Lloyds Banking Group, HSBC, RBS and Standard Chartered). Mid-July brought the news that the acting director of retail at the Financial Conduct Authority (FCA) will step up to the role of global head of compliance for wealth and investment management at Barclays in October. Since Christina Sinclair played a major role in securing redress for consumers affected by the PPI mis-selling scandal, the bank hopes that she will help the clean-up at Barclays.

Banks have also been forced to set aside billions of pounds to compensate those who were mis-sold PPI in the past. But while the total bill stands at over £10bn, the KPMG report shows that all five major UK banks recorded a profit in the first six months of the year for the first time since 2010. Source 1, Source 2

PPI compensation driving economic growth as payouts encourage consumer spending

19th August 2013. Economists have long surmised that the enormous volume of payment protection insurance (PPI) payouts has been driving the rise in household spending, but this theory has not been validated until now. The Office for National Statistics (ONS) confirmed last week that the £10 billion of PPI compensation claim payouts have encouraged spending, particularly on big ticket items, stimulating economic growth. Economists had presumed that PPI compensation payouts would add around 1% to annual disposable incomes, giving consumers more confidence and helping the economic recovery.

Simon Ward, chief economist at Henderson, said: "It has been a constant supporting factor for consumers for 18 months or so." In an economic review into household spending on cars in July, the ONS said: "A more recent influence on purchases of cars may be the compensation payouts to consumers made as a result of payment protection insurance mis-selling, amounting to a cumulative total of just over £10bn since the start of 2011.

"The relatively large size of these payments offers households the potential to make large purchases, such as new cars, which they might otherwise have deferred. The timing of payments corresponds quite closely with the renewed pick-up in car purchases that began in 2011." While the PPI payouts have undoubtedly played a role in improving household finances, they do little to explain the recent rise in consumer spending that has been driving growth. The scandal has had a wider impact on the economy, with thousands of people employed by banks and the Financial Ombudsman Service (FOS) to handle the claims and administer payments. Source

PPI supplementary fees rescue FOS from case fees shortfall

14th August 2013. The income generated from the new supplementary case fee for payment protection insurance related complaints that companies transfer to the Financial Ombudsman Service (FOS) has more than made up for the £17mn shortfall in case fees. The FOS budgeted £119.6mn for the 2012/13 financial year, but case fees in the 12 month period in fact totalled just £102.6mn, leaving a £17mn deficit. However, supplementary fees for payment protection insurance (PPI) claims came in at double the £52mn budget for the 2012/13 financial year, generating £126mn in total. The new £350 supplementary case fee introduced for PPI complaints in April 2012 is chargeable on the 26th case and any subsequent cases during the year.

Case fees work in the same way: businesses are not charged for the first 25 chargeable cases closed during the financial year, but any successive cases are charged as normal. Standard case fees rose to £550 for the 2013/14 financial year, a £50 increase from the previous year. Consumers are generally not charged for bringing a complaint to the FOS. The Ombudsman said that in line with accounting standards it has deferred a significant proportion of the supplementary case fee income received over the financial year into future years to cover anticipated costs. The FOS witnessed a 179% rise in the number of complaints in the first quarter of 2013/14, largely driven by the PPI mis-selling scandal. In the first 13 weeks from April 2013 the Ombudsman received 159,197 complaints, 83% of which related to PPI. Source 1, Source 2, Source 3

£1.4 million pay packet for FOS executives dealing with PPI complaints

13th August 2013. The Financial Ombudsman Service (FOS) has been incredibly busy this past year as huge numbers of PPI complaints continue to pour in. And it seems that all this hard work has been rewarded in financial terms, with the organisation's audited directors' report and financial statements showing that it paid its nine executives £1.4mn for the year ending 31 March 2013 (including pension and benefits). FOS chief executive Natalie Ceeney took home £256,064 in 2013 compared with £236,444 in 2012, a £20,000 increase.

She said: "The executive team, ably guided and supported by our board has significantly developed our organisation over the last year. The most profound change, of course, was the decision to build our capacity to handle the influx of new PPI cases."

According to its annual review published in May, the rise in PPI complaints has driven a 92% rise in new cases received by the FOS over the course of the year, prompting the organisation to recruit 922 permanent staff to deal specifically with the mis-sold insurance. Ceeney added: "We have been careful to develop our organisation responsibly, ensuring that we maintain quality at the heart of what we do, and ensuring that we spend money wisely." The report said: "Salaries for members of the executive team are reviewed annually. Any increases reflect changes in responsibility, inflation, market movements and individual performance. Salaries of the chief executive, deputy chief executive and the principal ombudsman also take account of the judicial salary-scales." Source

New BT phones to block out PPI nuisance calls

12th August 2013. Following a spate of complaints concerning nuisance calls, BT has launched a new collection of phones designed to block spam. A recent survey by industry watchdog Ofcom found that as many as 82% of people are receiving an average of 2.4 nuisance calls a week, with more than one in five of these related to payment protection insurance (PPI) claims management companies looking for business. While the majority of claims management companies (CMCs) operate ethically, there are a few that slip through the net and try to drum up a list of clients using nuisance calls in order to get them to claim for mis-sold PPI.

In a bid to spare consumers from these spam phone calls, BT has unveiled the BT7600, BT4000 and BT4500, a collection of landline phones designed to block withheld and international numbers, which are often the source of nuisance marketing calls. Ofcom revealed that PPI reclaims account for the majority of spam phone calls, with 97% people deeming them the most annoying - but now unwanted calls and those without caller ID can be locked out.

A VIP 'whitelist' of numbers can be created so that calls from friends and family overseas are not blocked. John Petter, consumer managing director at BT said: "BT takes the issue of nuisance calls very seriously and is constantly looking for ways to help our customers to manage their calls. "We are now expanding our range of nuisance calls phones to give even more customers the peace of mind that when the phone rings it should be someone they want to speak to." Source 1, Source 2

FCA investigates PPI complaint handling at Lloyds

7th August 2013. Lloyds Banking Group is under investigation from the Financial Conduct Authority (FCA) as the regulator seeks to examine the way in which payment protection insurance (PPI) complaints have been handled to date. The bank has been forced to put aside £50 million in order to cover the cost of the probe and said it was disappointed that action was being taken by the regulator. News of the investigation follows the termination of Lloyds' contract with accountancy firm Deloitte in May after an undercover reporter from The Times published evidence of bad practice in the way that PPI complaints were dealt with. Lloyds was also fined £4.3 million by the watchdog back in February after finding that up to 140,000 customers had endured delays when it came to receiving PPI compensation payouts.

The bank stated: "We will work with the FCA to resolve the issues and ensure our customers' complaints are addressed efficiently and fairly." What's more, Lloyds recently revealed that it has earmarked a further £450 million to cover additional PPI mis-selling costs, taking the total bill across all banks to a staggering £7.3 billion. It's not all bad news for the bank, however; the lender announced last week that its half-year profits of £2.1 billion have enabled a return to the black. At this time last year, the bank reported losses of £456 million, but a reduction in costs and efforts to drive down bad debts by 43% have propelled it out of the red. Source 1, Source 2

Mounting pressure on banks to reopen £4bn worth of rejected PPI claims

5th August 2013. The banking industry is not particularly popular with consumers at present and now fresh research has given the UK population yet another reason to point the finger at high street banks. New figures reveal that banks have saved a staggering £4 billion in payment protection insurance (PPI) compensation payouts after rejecting claims brought by customers who believe they had been affected by the mis-selling scandal. The research, conducted by The Times and Forbes Douglas, found that 2.4 million PPI compensation claims were dropped by consumers between 2010 and 2012 after they were rejected by their banks.

The initial rejection deterred many customers from taking their complaint elsewhere, but the research showed that more than 1.5 million would have been upheld should customers had gone on to appeal their cases with the Financial Ombudsman Service (FOS). With the average payout standing at £2,750, these abandoned claims have saved banks - and swindled customers out of - around £4 billion, prompting campaigners to call for rejected PPI claims to be reopened. The revelations are not likely to endear banks to consumers or help to repair their dented reputation, which has crumbled in the wake of PPI mis-selling and the rigging of Libor.

Industry bodies are similarly unimpressed with banks, which have been shifting claims onto external bodies rather than dealing with the problem themselves, forcing the FOS to hire thousands of extra staff. According to Which? the total PPI compensation bill stands at £18.4 billion - double the cost of the 2012 Olympic Games. Source 1, Source 2

Lloyds prepares to pay out millions more for new PPI claims

5th August 2013. Payment protection insurance is on track to become the most expensive mis-selling scandal in the history of the UK banking industry, and now more so than ever as new figures reveal that banks are planning on adding further to the compensation pot.

Lloyds Banking Group may have already earmarked a staggering £7.3bn to reimburse affected customers, but warned in recent disclosures alongside its financial results for the first half of 2013 that it might have to set aside hundreds of millions more for this purpose. While PPI claims have resulted in an average payout of £1,700 this year, Lloyds stated that going forwards it was assuming a lower figure of £1,440 per claim. However, for every £100 above this estimated figure the bank would need to shell out a further £70mn. The bank would also be forced to increase provisions by £10mn for every 1% increase in response rate to its PPI mailing programme in excess of the current 27% and also for every 1% increase in the claim uphold rate that outstrips the 73% assumption.

In a statement Lloyds said: "This represents the group's best estimate of the likely future costs, but a number of risks and uncertainties remain and it is possible that the eventual outcome may differ materially from the current estimate resulting in a further provision being required." Lloyds is not the only bank feeling the financial repercussions of the PPI scandal: last week Barclays increased its PPI mis-selling provision for the fifth time after it set aside a further £1.35mn. Source 1, Source 2

PPI claims management firms offer financial incentives to persuade people to hand over details of friends and family

August 2013. Hundreds of PPI claims management companies are operating on a refer-a-friend scheme, offering financial incentives to people who are willing to hand over the details of friends and family. Claims management firms have sprung up all over the country in the wake of the PPI mis-selling scandal, and some are taking drastic measures to stand out from the competition. One way to do this involves giving customers who pass over the details of friends and family vouchers and payments, ranging from £20 to £50 per referral. An anonymous This Is Money reader said that she had collected £170 worth of vouchers by referring friends to a PPI claims management firm. A spokesman for the firm defended the scheme, saying: "We don't want to be cold calling potential customers and our refer a friend scheme avoids unsolicited marketing that many companies are involved with." The company also insisted that the permission of the person whose details are being passed over must be given before any referrals take place. However, concerns have been raised that this could lead to more bothersome phone calls from claims management companies. While the majority of these do operate ethically, some slip through the net and have resorted to cold calling potential customers - even those registered with the Telephone Preference Service, which is designed to prevent unsolicited sales and marketing calls. Source

Barclays earmarks additional £1.35mn for "eye watering" PPI compensation bill

31st July 2013. Barclays has increased its PPI mis-selling provision for the fifth time after it set aside a further £1.35mn yesterday to compensate customers affected by the scandal.

The extra provision drives the bank's total PPI compensation bill to more than £4bn and pushes the overall total across all banks and financial institutions to £17.9bn, with further increases expected this week.

Half year results from Barclays revealed that the bank has also set aside another £650mn to compensate small business that were mis-sold interest rate swap products. This brings the bank's total mis-selling bill to £5.5bn. While the drop-off in claims per month has plummeted by 46% since the peak in May 2012, Barclays admitted the slowdown had not been as quick as expected, prompting it to add to its provisions for redress for the fifth time.

The latest provisions set aside for PPI redress may have taken the bank's mis-selling bill past the £4bn mark, but with these only being a "best estimate" of the cost, Barclays warned that further provisions may be in the pipeline. Which? executive director Richard Lloyd said: "The eye watering PPI compensation bill continues to escalate, showing how much banks have been in denial about the scale of their mis-selling. "The banks still have a long way to go to clean up their act and one way they should do so is by making it much easier for consumers entitled to PPI refunds to claim their money back." Source 1, Source 2, Source 3

Is the volume of PPI complaints on a downward trend?

31st July 2013. Banks can breathe a big sigh of relief as figures from the Financial Ombudsman Service (FOS) suggest that consumer complaints concerning payment protection insurance (PPI) are finally on a downward trend. The organisation is currently receiving 2,000 new cases each working day as opposed to the 3,000 it was dealing with on a daily basis six months ago. While chief financial ombudsman Natalie Ceeney noted it is difficult to predict trends, she told Reuters in an interview on Monday (July 29) that she suspects "we're on the downward curve". She said: "In any complaints cycle the numbers rise and you subsequently see them fall. I suspect we're on the downward curve. "Will it fall to 1,000 in six months? I just don't know. The interesting thing about PPI is none of us know where it's going to go." The figures come to light in the week banks are expected to announce plans to earmark billions more for the PPI compensation pot. The industry has already put aside in excess of £14bn to compensate those affected by the mis-selling scandal and both Barclays and Lloyds are expected to add to this in the near future. This is partially because most of the big banks have outsourced their PPI complaint handling rather than dealing with it themselves. Ceeney said: "The problem if you outsource is that you have to pay huge amounts of care to make sure your outsourcers are working to the right standards."Source 1, Source 2

PPI cold calling and deficient investigations put CMCs in firing line

24th July 2013. Claims management companies are coming under fire for nuisance tactics including cold calling and failure to trade responsibly. As the payment protection insurance (PPI) scandal has snowballed, a wealth of claims management companies (CMCs) have emerged to help customers secure the compensation they are entitled to. While the majority of CMCs operate in an ethical fashion, a few slip through the net and employ tactics such as cold calling to find business.

However, independent financial advice service Citizens Advice has had enough and has called on the government to clamp down on unscrupulous CMCs which resort to spam texts and nuisance calls to hunt for customers. Gillian Guy, Citizens Advice chief executive, said: "The Government should ban claims firms from cold calling, that way protecting people from the nuisance of unwanted calls and unscrupulous firms who don't provide all of the necessary information at the start." CMCs have also been causing problems for dealers, with partial investigations into a claim causing high levels of frustration.

According to the head of training and compliance at Finance Cover & Training, Karen Wagstaffe, a number of CMCs have been sending letters on behalf of customers to dealers without any indication as to whether a car, finance or insurance was the subject of the claim. Many dealers then have to check their systems manually to see whether a deal was done and whether it concerned finance and had PPI. Ms Wagstaffe said: "Often they weren't sold finance or insurance but the amount of time and energy it takes to locate these answers does indeed frustrate dealers no end." Source 1, Source 2

PPI Heads Consumer Complaint Charge Towards Financial Sector

21st May 2013. The Financial Ombudsman Service (FOS) is dealing with double the amount of complaints compared with just three years ago, as scandal-hit consumers are becoming more aware of their rights. The FOS is currently receiving over a quarter of a million new cases every year, a two-fold increase on the amount the group was handling three years ago. Consumers are biting back and registering complaints concerning financial institutions and products ranging from bank accounts to self-invested personal pensions.

However, it is PPI in the driver's seat, with the insurance accounting for the most complaints by a comfortable margin. Between October and December last year, the FOS registered 145,546 complaints about PPI, more than double the figure recorded in the previous quarter, which stood at 66,882. The upwards trend is characteristic of the past five years, and has culminated in the FOS receiving around 2,000 new cases every single working day. And with £50bn worth of PPI policies sold over the past 15 years, the figures are unlikely to tail off anytime soon.

According to Natalie Ceeney, the Chief Ombudsman, the reason for the dramatic rise in complaints can be explained by a breakdown in trust. The widespread selling of PPI has empowered consumers, who are more confident about speaking up when they are unhappy. Ms Ceeney said: "We have seen a general increase in complaints across all areas of money and finance, from pensions to payday loans. A lot of this results from more confident consumers who are increasingly aware of their rights." Source

RBS Chairman Hints at Further PPI Issues

15th May 2013. The chairman of the Royal Bank of Scotland hinted that repercussions of PPI scandal may continue for some time, after he said at an annual general meeting yesterday that the bank's lawyers would "skin him alive" if he were to assure that no more problems would surface regarding mis-selling scandals, Libor-rate fixing and other financial issues.

Sir Philip Hampton and the board at RBS spoke to shareholders yesterday (14 May) at its AGM at the Gogarburn headquarters. While he insisted that the bank is "through the worst", he refused to deny that there were further "skeletons in the closet" at yesterday's meeting, indicating that additional issues could emerge around the bank's role in the PPI scandal and claims that it is mistreating its customers.

Sir Hampton told the audience that despite various setbacks, the bank was now on track to "substantially complete" its five year restructuring plan by the end of 2014. Back in 2008, chief executive Stephen Hester pledged to restructure the ailing bank, which was largely taken into public ownership under a £45bn government bailout.

He admitted, however, that charges for PPI mis-selling, Libor-fixing and the mis-selling of complex interest rate hedges to small businesses were "disappointments" for the bank last year, stating that "conduct costs" had totalled £2.2bn. He added: "A lot of it [Libor rate fixing] did happen in 2008, and certainly in the opening months of the new board and new management at RBS. Nevertheless that behaviour was completely unjustified and regrettable." Source 1, Source 2

PPI Scandal Deters Students From Financial Sector

13th May 2013. The financial sector has always been an appealing profession for new graduates, who are attracted to big banks by generous salaries and excellent career opportunities. However, the repercussions of a number of financial scandals in recent years seem to have put students off the idea of working in the banking industry. Scandals including the mis-selling of PPI and the rigging of Libor have had a widespread effect, which according to the latest research has extended its reach to university students. Research for Lloyds by YouGov found that two fifths (41%) of students are wary of putting their trust in the banks and financial services sector.

As a result, a quarter of students would be embarrassed to tell their parents if they secured a graduate role with a bank, and just 2% would consider a career in financial services. Payment protection insurance (PPI) is designed to cover loan and credit card repayments should the individual be unable to work for a variety of reasons, such as illness.

However, it was widely mis-sold across the country, resulting in a £9.3bn compensation bill to date. Lloyds Banking Group chief executive, Antonio Horta-Osorio, said: "We need to take steps as a sector towards rebuilding our reputation through how we behave and what we do. In tandem with this we urgently need to address the perception of banking as an attractive career opportunity for young people. "We want the best and the brightest to see banking as a credible career choice. This is vital for the industry's long-term viability." Source

Yorkshire and Clydesdale Banks Pour Additional £38mn into Customer Compensation Pot

13th May 2013. The payment protection insurance (PPI) compensation pot has reached the staggering amount of £9.3 billion as banks continue to set aside funds to reimburse those affected by the financial scandal. Yorkshire and Clydesdale Banks are the latest organisation to hit the headlines after it was revealed it has set aside a further £38 million to cover "customer redress issues".

The latest provision sends the total amount put aside for customer redress soaring to £83 million. The figure excludes funds reserved for PPI compensation, for which the banks have allocated an additional £51 million. The banks, which are owned by National Australia Bank, published its half-year results to the end of March last week. The figures disclosed that a provision of £15 million had been made specifically for interest rate swap mis-selling and that a further £23 million had been allocated for "other customer redress issues".

It remains unclear exactly which redress issue this £23 million relates to. However, investment advice has been ruled out as the driver for soaring number of claims. Some £409 million was paid out to consumers in February 2013 who lodged a complaint about the way they were sold PPI. According to the Financial Conduct Authority (FCA), which replaced the Financial Services Authority (FSA) last month, this pushed the total compensation awarded to individuals since January 2011 to £9.3 billion, a figure which continues to rise. Source 1, Source 2

Lloyds Profits Soar to £2bn as Bank Fails to Add to PPI Compensation Pot

9th May 2013. Lloyds Banking Group witnessed a dramatic rise in its first-quarter profits after it announced it would not be setting aside extra funds this quarter to compensate the victims of the PPI mis-selling scandal. The decision not to put aside extra provision for PPI mis-selling was partially behind the sharp rise in profits, which shot up to a headline figure of £2bn.

The absence of such provisions, in addition to higher margins and a 40% fall in provisions for bad loans, has given profits a considerable boost. Some £1.1bn of the £2bn headline figure accounts for asset sales and other volatile items, including the sale of government bonds on which the bank has raked in a £776mn profit. The bank seems to have recovered from last week's setback, when discussions to sell 632 branches to the Co-op collapsed, but now the chief executive of the Group has reported the bank is making "substantial progress".

Lloyds has so far poured £5.8bn into the PPI compensation pot. However, the bank's interim statement noted that since the volume of PPI complaints has fallen, it would not be adding to the compensation pot this quarter. Source 1, Source 2

FOS calls for end to "intrusive and distressing" PPI messages

7th May 2013. Complaints about unwanted PPI text messages and cold calls have reached a peak, with 2,000 cases referred to the Financial Ombudsman Service (FOS) every single day. The problem is particularly prominent in Bolton where furious residents bombarded with a multitude of unsolicited PPI cold calls and text messages are calling for tougher sanctions to be enforced.

Bolton made the fourth most PPI complaints to the FOS during the previous financial year, but the grievances only led to a rise in fraudulent companies offering their services. Ajaz Khan, Business Development Director at Credit Claims in Bolton, said that rules need to be changed to put a stop to such behaviour, which he described as "tantamount to harassment". He said: "Many of our customers come to us after recommendation and often tell us that they have had text messages or cold calls." While the majority of claims management companies (CMCs) operate ethically, there are a few that slip through the net. Richard Lloyd, Which? executive director, wants to see the government crack down on fraudulent CMCs if the regulators fail to deal effectively with complaints.

He said: "Unwanted calls or texts are not just a nuisance. They can be intrusive and distressing. "Many of us have been bombarded with spurious claims of PPI or injury compensation, and people are telling us they are totally fed up with this nuisance and want to see action. "We want to see tougher regulation from the Government to clean up the CMC industry." Source

FSA 'exacerbated' PPI scandal, claims FOS chief executive

1st May 2013. The Financial Ombudsman Service (FOS) has welcomed the Financial Services Authority's (FSA) replacement after claiming that the establishment exacerbated the PPI mis-selling scandal.

The Financial Conduct Authority (FCA) took over from the FSA at the beginning of April, and its "pragmatic" approach has already been commended by FOS chief executive Natalie Ceeney. The April/May edition of the Ombudsman news quoted Ceeney as saying that the FSA had failed to act quickly and in a decisive manner when the PPI scandal first surfaced, and that she hoped the FCA had taken lessons on board from the light-touch regulation that aggravated mis-selling scandals such as PPI.

She said: "Ultimately, regulation will be increasingly effective if it takes account of how things are playing out in real life. "So a more pragmatic, commonsense approach can only be good news - and we look forward to working closely with the FCA as it implements its new approach to regulation." This follows an interview with the head of the FCA, Martin Wheatley, conducted by MoneySavingExpert. Insisting that the FCA would be different to the FSA, he said: "The key difference is in the name, so it's a conduct authority, so we're not focused on all aspects of financial services, we're predominantly focused on conduct and we're going to be focused more on consumers than the FSA has been." He added that while the FSA was "too slow to realise the severity of PPI" such issues will be dealt with differently in the future. Source 1, Source 2

Banks Reject a Third of PPI Customer Complaints

30th April 2013. UK banks played a leading role in the scandalous mis-selling of payment protection insurance (PPI) but it seems they are not so willing to reimburse customers where compensation is due.

According to a report in The Daily Telegraph, banks are rejecting around one in three PPI complaints from customers, which is leading to considerable backlogs and subsequent delays in awarding compensation.

The figures suggest that banks are stalling when it comes to paying PPI compensation. This is despite the fact that the big banks have collectively set aside £9.3 billion for the specific purpose of reimbursing those mis-sold the insurance.

Concerns have been raised that banks are rejecting legitimate claims, leading to backlogs and delays that could have been avoided. The Financial Ombudsman Service (FOS) said: "If claims were being resolved in the first instance, it would be better for everyone concerned." However, the British Bankers' Association denied that claims were being turned down, claiming that it is working with the ombudsman towards an improved system and customer experience.

Payment Protection Insurance is designed to cover loan, credit card and debt repayments if an individual is unable to work for some reason. Banks and other lenders sold PPI to customers either without clearly explaining what it was or used high-pressure selling techniques to effectively force sales. Some lenders told customers PPI was a compulsory component of a loan or simply added it without the borrower's consent. Source 1, Source 2

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