PPI news thread

Barclays Bank Challenges PPI Ban:

http://financialadvice.co.uk/news/4/insurance/11949/Barclays-bank-challenges-PPI-ban.html

Monday 7th September 2009

It has been revealed that Barclays bank, along with Lloyds bank, is set to challenge the UK government's controversial decision to ban the sale of payment protection insurance when credit arrangements are agreed. The ban, which will come into force in October 2010, will see a cooling off period of seven days before any credit provider can approach a customer regarding the sale of payment protection insurance.

At the moment credit providers are able to sell payment protection insurance at the point at which a credit agreement is signed, which many believe has reduced competition in the marketplace. However, Barclays bank is challenging two particular elements of the competition commission's report i.e. the size of the market and the evidence provided regarding competition issues. In a bizarre turnabout, Barclays bank will be supported by 43% UK government owned Lloyds bank which is something of an embarrassment for the UK government.

Payment protection insurance has long been the bane of the consumer protection sector with particular accusations regarding the price of those packages offered at source, as well as the necessity for customers to sign up to them. It will be interesting to see how the Barclays bank court case develops because this is a significant stumbling block for the banking sector and a potential crossroads for the UK government. Who will win the day?

Like the above posts:

Barclays starts appeal against PPI insurance ban:

http://in.reuters.com/article/bankingfinancial-SP/idINL735213120090907

Barclays begins appeal against insurance sale ban
* Lloyds Banking Group, Shop Direct back appeal
* Judgement expected towards end of year
LONDON, Sept 7 (Reuters) - Britain's Barclays (BARC.L: Quote, Profile, Research) has begun a challenge to the British competition watchdog's planned ban on the sale of payment protection insurance (PPI) alongside credit cards, loans and mortgages, the bank said on Monday.
Barclays, whose appeal is being supported by rival Lloyds Banking Group (LLOY.L: Quote, Profile, Research), said in April it would challenge the legality of the Competition Commission's plans to clamp down on PPI, taking its case to the Competition Appeal Tribunal.
PPI has long been a problematic product for consumer bodies, who have argued companies get away with charging high prices because they face little competition. The Competition Commission said last summer that Britons are being overcharged by 1.4 billion pounds ($2.30 billion) a year in PPI sales.
Barclays plans to oppose the Commission's decision, effective from October next year, to force companies to wait seven days to sell PPI to any customer who takes out a credit agreement.
The vast majority of 12 million PPI policies in Britain are sold at the same time as a mortgage, credit card or loan.

"The main area of concern is the point of sale ban which, it is felt, is not justified by the evidence that has been provided," a spokeswoman for the bank said.
"Additionally, the scope of the market definition set by the Competition Commission is being challenged."
Lloyds said in a separate statement on Monday that it believes consumers will be disadvantaged by a ban, warning it "could potentially leave thousands of customers exposed at a time when protection has never been more important".
PPI covers repayments on credit products if the borrower is unable to make payments due to accident, sickness, unemployment or death. Banks say they have seen a significant increase in unemployment claims on PPI policies in recent months.
Barclays, which does not publish specific revenue and profit data for its PPI products, said PPI is a revenue stream but not a significant one for the group.
The tribunal said the appeal is set to last four days -- with a possible additional fifth day -- though a judgement could take two to three months, with a ruling expected in December.
The Competition Commission has said it is pressing ahead with its PPI plans, pending the outcome of Barclays' appeal.
Barclays' appeal is backed by Lloyds, Britain's largest retail bank, but also by Shop Direct Group Financial Services, the UK's main provider of retail PPI, a small slice of the market which relates to home shopping.
The banks' challenge will be opposed by the Competition Commission and the Financial Services Authority.

http://www.webpage2day.com/2009/09/11/financial-services-authority-fsa-comments-about-ppi/

Financial Services Authority (FSA) Comments About PPI

September 11th, 2009



In spite of being an ordinary or an expensive electronic appliance, Payment Protection Insurance or PPI is nowadays accessible for more or less every electronic item. The application of PPI for each electronic item has come up with many problems for the consumers. Undoubtedly, it was intended to help the clients to protect them from a financial crisis in case of any urgent situation; many people find it to be counterproductive and overbearing in most of the instances. That’s the time when Financial Services Authority or FSA takes over to help consumers.
FSA is the regulator of all financial institutions in the United Kingdom. Given this supervisory role, FSA has to deal with a number of cases where people lodge complaints about PPI. The usual complaint would be related to a non-payment of PPI dues or the failure of PPI to help a customer in avoiding bankruptcy, among other things.
FSA keeps an eye on the malpractices on behalf of the PPI sector and it has launched several directives in order to deal with the issue. As mentioned previously, traders attract consumers towards PPI and they accept to obtain a PPI for the flexibility of their payment plans.
When the time comes to refund their dues, as mentioned in the payment plan and they want to avail PPI, consumers find it to be non-applicable or with some severe legal and technological measures. They find it inapplicable and not only this, in any urgent situation, the PPI found to be useless instead of helping out a client in trouble.
FSA discourages the use of PPI for simple electronic goods. A widespread practice had been to offer durable goods purchasers with a PPI. Poor customers had no clue about history of malfunctioning of PPI. However, when these clients came to know about this trouble, they had no further option but to speak to FSA about this.
FSA has also introduced new terms and conditions in the PPI policy. Prior to the implication of these new terms, companies were unwilling to reimburse the funds and lots even rejected to lend a hand to under the weather customers. Now they are forced by law in order to pay back every single penny to the affected consumers.
The apex regulator has been working hard in order to increase consumer’s awareness about the advantages and disadvantages of PPI clauses. This is not all, but they have already initiated crackdowns on companies with previous doubtful PPI applications. Some of the companies with poor PPI practices have already been shut down, where as others have corrected their PPI costs and measures.
According to some reports, FSA has plans to put a ban on PPI. Some banks have stopped their PPI programs and chances are bright that they will completely stop using PPI. Since PPI has failed to prove its effectiveness, FSA may decide to impose a ban on PPI permanently.

Finance News UK consumers have no confidence in the banking regulatory system:

http://www.in2town.co.uk/Finance/Finance-News-UK-consumers-have-no-confidence-in-the-banking-regulatory-system/menu-id-4990

Survey reveals need for more coordination amongst financial regulatory bodies in protecting consumer interests

As banks announce the return of significant profits and the controversial bonus culture, new research by PortalClaims.com has found consumer confidence with financial regulators is at an all time low. Two-thirds of UK consumers harbour doubts about the ability of the Financial Services Authority (FSA) and Financial Ombudsman Service (FOS) to protect their interests and effectively monitor and regulate the banks in regards to Payment Protection Insurance (PPI).

The PPI industry, believed to be worth £3.8 billion to the banks, has come under fire in recent years with up to two million people having paid out for PPI despite it being an inappropriate product for them. Of the 5,000 people questioned by PortalClaims.com, the online company founded to help customers who have been wrongly sold financial products, such as PPI, over 70 per cent of the UK population are at least doubtful of the FSA’s or FOS’ effectiveness in regulating their industry, with 32 per cent having no confidence and at all.

Tim Moore, Managing Director, PortalClaims.com comments: “We need a regulatory system that clearly represents the interests of the consumer. On one hand the FSA’s job is to make sure the banks have enough cash reserves to operate. On the other it has to make sure that the banks treat customers fairly when they complain about PPI which means paying out large sums in compensation. The FSA is clearly conflicted in its duty to honour consumer interests.

“As a result, some banks are getting away with avoiding their responsibility to treat customers fairly. Barclays is a great example of this. It has failed to respond to 92 per cent of PPI complaints submitted via PortalClaims.com and this has been going on for at least eight months now! Although the FSA is aware of this situation it seems to be turning a blind eye as little or no action has been taken.”

The research also uncovered over a third (38 per cent) of consumers remain unaware that most PPI is mis-sold.

Moore continues: “These figures underline that neither the FSA nor the FOS are doing enough to effectively inform consumers of their rights or protecting those rights in the wake of the widespread mis-selling of PPI.”

Millions make finance complaints


http://news.bbc.co.uk/1/hi/business/8235643.stm


More than nine million individual complaints were made to firms in the financial services industry in the 2006-2008 period, figures have shown. Banking and loans accounted for more than half the formal complaints made to financial companies in that period.
The Financial Services Authority (FSA) has published the complaints figures for the first time.
During the second half of 2008, 40% were being settled in the customers' favour.
The figures have been driven by huge numbers of complaints about bank overdraft charges, and the mis-selling of payment protection insurance and mortgage endowments.
"Publishing this information will mean that consumers and firms can now see how many complaints the industry receives and how it deals with them," said FSA director Dan Waters.
Individual companies will start to publish their own complaints data from July 2010.
'Unhappy customers'
The total number of complaints rose from 2,727,000 in 2006 to 3,411,000 in 2007 before dropping back last year to 2,903,000.

Financial firms simply aren't treating consumers well enough


Which?


There would have been more but for the fact that the FSA told regulated firms in the middle of 2007 they they did not have to include new complaints about charges for unauthorised overdrafts levied by banks and building societies.
More than 1.2 million of these complaints have since been "parked" until the issue is settled by the courts.
"It's a poor reflection on the industry that there are so many unhappy customers out there," said Which? personal finance campaigner Phil Jones.
"Financial firms simply aren't treating consumers well enough and things must change if the industry is to rebuild its reputation," he added.
Current accounts
The FSA's figures were dominated by complaints about current accounts, especially by demands for the return of overdraft fees, which reached 3,513,000 over the three-year period.

Put in context, the proportion of reportable complaints is still very small at 3.5 per thousand products held


British Bankers' Association


"The spike in the total number of complaints in the first half of 2007 is the result of a large increase in complaints about overcharging and poor customer service in relation to banking and loans products at that time," said the FSA.
There were 908,000 complaints about the mis-selling of mortgage endowments during the period, although their number tailed off dramatically during the three years.
Complaints about credit cards came a close third at 745,000.
But a surge in complaints about payment protection insurance (PPI) saw the number of complaints about general insurance and "pure protection" policies double, from 62,000 to 127,000, between the first half of 2006 and the second half of 2008.
Unhelpful
In April this year, the Financial Services Ombudsman (FOS), which deals with complaints that firms cannot settle themselves, accused many firms of being deliberately unhelpful.
However, a spokeswoman for the British Bankers' Association welcomed the publication of the data, saying that the vast majority of bank customers had "no problems" with their accounts or bank services.
"Millions of transactions for millions of customers go through the banking system every day," she said.
"Put in context, the proportion of reportable complaints is still very small at 3.5 per thousand products held," she added.
The vast majority of industry complaints were settled within eight weeks with, by the end of last year, just 10% taking longer to deal with.
Last year, the firms most likely to admit making a mistake were building societies, who settled 59% of complaints in their customers' favour.
Simon Morris, of City law firm CMS Cameron McKenna, was more critical of the FSA's publication of the data.
"Presenting crude statistics about complaints that firms receive provides no useful information to help investors make important decisions," he said.
"Instead it creates an alarming and inaccurate impression that firms are not to be trusted. It is irresponsible for the FSA to be undermining consumer confidence in such as insidious manner."