PPI news thread

di3004

News from FSA website - scams etc.

FSA issues warning about new share scam:


http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/034.shtml


FSA/PN/034/2010
24 February 2010
The Financial Services Authority (FSA) has issued a warning following the dramatic increase in overseas fraudsters selling shares using the names, registration numbers and addresses of FSA authorised firms and individuals.
The FSA has noticed a significant rise in this type of fraud, with crooks imitating genuine authorised firms to try and convince consumers of their legitimacy.
Recently the FSA has seen instances where an authorised firm’s website has been cloned but with a few subtle changes, such as a different phone number or false email addresses.
Should anybody receive an unsolicited call or email from a firm which they are not a customer of, the FSA is recommending that people should take the following steps:

• ask for the contact details of the person calling you;
• check the firm or individual’s status on the FSA register;
• call the firm back on the switchboard number provided on the FSA register to make sure that the call came from the legitimate authorised firm.

Anybody who has been contacted by a suspicious firm or has any doubts should report the encounter as soon as possible by calling the FSA on 0300 500 5000 or reporting it online.
Consumers also need to be aware that firms not registered with the FSA are not covered by the Financial Services Compensation Scheme. This means that should somebody invest through an unauthorised business, it is very likely they will lose their money if the firm goes bust or disappears.
Jonathan Phelan, head of the FSA’s unauthorised business department, says:
“It is encouraging that awareness of share scams is now so high that conmen are having to come up with new tactics as it shows our strategy is working. Sadly, however, this also means there is a renewed risk to investors and a new type of scam for us to tackle.
“Our message remains the same: never deal with unauthorised firms. If somebody calls you out of the blue to promote shares, then you should be very wary of them even if they claim to be authorised by the FSA. If in doubt, make a report to the FSA; the more information we receive on a firm, the better placed we are to shut them down.”
Share fraudsters, commonly known as ‘boiler rooms’, usually contact people by telephone and use high pressure sales tactics to con investors into buying non-tradable, overpriced or even non-existent shares. Boiler rooms are unauthorised, overseas-based companies with bogus UK addresses and phone lines routed abroad.
Notes for editors

1. Significant rise is attributed to the number of enquiries received by FSA: Between January and October 2009, the FSA received three enquiries regarding this type of fraud; since the beginning of November 2009 there have been 29.
2. The FSA recently sent letters to 10,000 investors warning them of their presence on a list used by fraudsters to target people with worthless shares.
3. Share fraud is estimated by the FSA to cost the UK around £200m a year. Last year the FSA received calls from over 3,100 people who had been contacted by boiler rooms. Of these, 734 had become victims, losing an average of £24,000 each. Based on these figures, total losses reported are about £17m annually. The FSA and the Police believe that only about 10% of victims report this type of crime.
4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.

di3004

Banks push products on customers:

http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=500731&in_page_id=7&ct=5


Banks should end the hard-sell culture within branches and instead deal with the epidemic of mis-selling scandals, according to senior industry figures and consumers.
• Info on ISAs, share dealing, pensions, gold: delivered free



They want a ban on bonuses, prizes and other incentives for staff to meet sales targets, irrespective of customers' needs.


The issue of hard-selling is in the spotlight as the Future of Banking Commission continues listening to consumers' views on banking reform.
Financial Mail Personal Finance Editor Jeff Prestridge has been called as a witness to the commission and we will shortly submit a report based on years of feedback from readers.

In addition to mortgage endowment mis-selling in the Nineties, High Street banks wrongly sold hundreds of thousands of with-profits bonds and precipice bonds in the early 2000s and are still - at least in the case of Barclays - routinely mis-selling risky investments to older, cautious customers.

Worst of all has been the banks' flagrant mis-selling of billions of pounds of payment protection insurance (PPI), a problem still being untangled to this day.

The commission is also hearing direct from ordinary consumers. From 1976 to 1994, Gill Kirk, 54, from Cheshunt, Hertfordshire, worked in a branch of Midland Bank and then HSBC after it took over Midland.
Gill, a youth worker who helps children in east London to enjoy outdoor pursuits such as canoeing and climbing, told the commission: 'Selling was always in the culture, but as the years went on there was more focus on meeting higher targets. 'We got points, we got prizes. The more you sold, the more points you got. You'd get prizes like vacuum cleaners or cameras.'


Read more: http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=500731&in_page_id=7&ct=5#ixzz0hVOlxJXB


More on above link........

marshallka

Not really relevent to PPI but makes you think perhaps. Those that do pay are paying for those that don't maybe

So banks are actually writing debts off then

http://news.bbc.co.uk/1/hi/business/8543083.stm


The level of debts written off because defaulting borrowers will never repay them shot up in 2009, Bank of England figures have shown. In 2009, financial institutions wrote off £4.12bn in credit card loans, up from the previous record amount in 2008 of £3.2bn.
The value of mortgages written off more than doubled, but from a lower level, from £408m in 2008 to £984m in 2009.
The figures reflect the effect of the recession on personal debts.

di3004

Complaints against bailed-out banks soar:


http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=500811&in_page_id=7&ct=5


Complaints against the nationalised banks have soared by a third in only six months.



Royal Bank of Scotland and Lloyds Banking Group have seen a huge increase in complaints about overcharging, hikes in credit card rates and mis-sold insurance policies, according to figures from the independent Financial Ombudsman Service.

The taxpayer owns 41% of Lloyds Banking Group after pumping in £23bn, and 84% of RBS after putting in £45.5bn.
The number of disputes where the ombudsman is being asked to step in spiralled in the latter part of last year. It received more than 17,000 complaints about Lloyds TSB and Bank of Scotland, which includes Halifax, some 4,500 more than in the first six months of 2009.


• Full a full breakdown of customer complaints against banks, click here...



There were 5,476 complaints about RBS and subsidiary NatWest between July and December 2009, an increase of 30 per cent on the first half of the year.
A spokesman for the ombudsman said: 'We continue to have concerns about the way companies are handling complaints. There are still far too many that find their way to us that have not been handled properly at the initial stage. Companies need to take their customers' concerns seriously.'


Marc Gander, from the campaigning Consumer Action Group, said: 'As far as we can see, all of the banks handle customer complaints poorly, aggressively and dismissively.
'Our view is that all of the banks use their complaints handling process as a way of drawing things out and fatiguing the customer. Those who last the distance then get shuffled off to the ombudsman and the delay continues.'
• Our guide to writing the ultimate letter of complaint

The City watchdog, the Financial Services Authority, has grown so concerned about the way customers of Royal Bank of Scotland are treated that it has started an investigation into its complaints handling.
If found in breach of rules governing the fair treatment of customers, RBS could be forced to pay millions in fines and compensation.
Other big banks which attract high numbers of complaints could fall under the regulator's spotlight. From this August the worst firms will have to 'name and shame' themselves. The FSA will force those which receive the most complaints to publish the percentage resolved within two months and the number upheld.
RBS said it would co-operate fully with the regulator. Lloyds said: 'We take all customer complaints very seriously and are committed to working with the industry and regulators to ensure that complaints are dealt with fairly, quickly and consistently.'
In a separate development yesterday, banks were accused of aggressively targeting customers who fall into debt. A report by the Scottish Affairs Committee found customers are subjected to stress by repeated and frequent calls from 'unsympathetic' call centres. Each week, our newsletter is packed with unique information on how to beat the financial services industry at its own game:


Read more: http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=500811&in_page_id=7&ct=5#ixzz0hg1Ydc0E

di3004

New rules on payment protection insurance are delayed

http://news.bbc.co.uk/1/hi/business/8558140.stm


The Financial Services Authority (FSA) is delaying its plans to combat the mis-selling of payment protection insurance (PPI). Criticism from the financial industry has forced the FSA to extend its consultation by another six weeks.
The FSA's own consumer panel said this pressure was to blame for delaying the fair treatment of consumers.
PPI is supposed to help people repay their loans if they fall ill or lose their jobs.
In September 2009, the FSA proposed a comprehensive overhaul of the rules not only on selling PPI, but also of the way that lenders and insurance brokers should deal with complaints about past mis-selling.
The FSA was responding in part to a huge upsurge in complaints filtering through to the Financial Ombudsman Service.
Consumer organisations have welcomed the suggested rule changes, but not the lenders and insurance brokers for whom PPI sales are very lucrative.
"We are disappointed that the industry has responded so critically to our proposals but we remain 100% committed to bringing about genuine, lasting change in the PPI market," said Dan Waters, of the FSA.
"We do, however, recognise the importance in ensuring that genuine concerns have been listened to."
Massive compensation
The revised consultation document from the FSA - 170 pages long - reveals why the banks, other lenders, and insurance brokers are so worried.

We have well-founded and adequately evidenced concerns about widespread weaknesses in PPI sales practices, and in PPI sales complaint handling


Financial Services Authority


They argued that they would have to pay between £700m and £1.2bn over five years in redress just to those consumers who had complained about being mis-sold PPI, including administrative costs.
This was far more than the FSA first thought.
On top of that, the FSA now agrees that redress paid to people who have not complained, but who are uncovered by firms who are forced to review their past sales practices going back to 2005, might range from £1bn to £3bn.
The regulator is also now assuming that the industry will have to deal with 500,000 complaints in the first 12 months after its new rules come into force.
That is because of the continuing rise in PPI complaints already being made, and the impact of the publicity that would surround the introduction of the FSA's plans.
Last September, it estimated there would be just another 158,000 complaints for firms to deal with.
'Consumer detriment'
Despite meeting resistance from the insurance industry and lenders to its latest plans, the FSA said it was in no doubt that reforms were still needed.
"We have well-founded and adequately evidenced concerns about widespread weaknesses in PPI sales practices, and in PPI sales complaint handling, which have given rise to the risk of significant ongoing consumer detriment, and that we need to address these in order to protect consumers and meet our statutory objectives," the FSA.
Among the criticism of the FSA's package of measures were that:
• it had not shown there was a genuine problem with either sales or complaints handling
• new rules on dealing with complaints were not appropriate
• it had underestimated the huge cost to the financial services industry
• it might not have the legal powers to enforce its plans for firms to deal with complaints they had previously rejected.
The consumers association Which? demanded that the FSA "stand firm".
"After years of mis-selling and poor complaints handling by the industry, consumers want to see action on PPI, not more consultations," said Peter Vicary-Smith, of Which?.
"With a question mark over how much of the Financial Services Bill will become law, it is vital that the FSA's original plans to force firms to review rejected complaints are implemented quickly."
'Fairer outcome'
The further consultation period prompted by industry criticism was dimly received by the FSA's own consumer panel.
"For too long, firms have been letting down their PPI customers by not handling their complaints fairly," said Adam Phillips, chairman of the panel.
"Now the industry seems determined to fight against the FSA introducing new rules and guidance which would ensure consumers receive a fairer outcome if they make a complaint," he added.
The sale of PPI has long been regarded as a "protection racket" by consumer groups.
They have accused banks and brokers of selling expensive polices to people who either did not need them or who would be excluded in any case from making a claim.
The Competition Commission found that in 2006 lenders made excess profits of £1.4bn when selling the insurance, and last year proposed that lenders be banned from selling PPI polices at the same time as making a loan to a borrower.
Last September the FSA ordered banks and other lenders to compensate customers who may have been mis-sold PPI, especially the so-called "single-premium" variety that until recently was commonly sold to people when they took out unsecured personal loans.
The sale of that version of the insurance was banned earlier last year by the FSA

di3004

Mis-sold insurance estimated cost up:

http://money-news.dailyfinance.co.uk/article/2010/03/09/mis_sold_insurance_estimated_cost_up

The City watchdog doubled its original estimate for the cost to insurers of compensating people who are mis-sold controversial payment protection insurance (PPI).

The Financial Services Authority said it was now expecting firms to have to handle around 450,000 complaints about the cover each year going forward, rather than the 158,000 it had originally estimated.

The inflated number of projected complaints is expected to push up the cost of settling future mis-selling claims from up to £80 million, to as much as £203 million a year.

On top of this, banks and insurers are also expected to have to pay out between £900 million and £2.7 billion to compensate people who have previously been mis-sold one of the policies.
But despite conceding that the costs were likely to be higher than it had originally envisaged, the FSA insisted it was not watering down its proposals.

In September last year, the regulator said firms representing more than 40% of sales in the single premium PPI market had agreed to review sales stretching back to July 2007.

It also said it was issuing new guidance to ensure PPI complaints were handled properly in future, adding that 185,000 previously rejected claims would have to be reassessed against this benchmark.

The measures aim to ensure that consumers are treated consistently and fairly, either when they buy a new PPI policy or complain about an existing one.

Publishing feedback on responses it had received in relation to the proposals today, the FSA said consumer groups were very supportive, but PPI providers and industry groups had been "highly critical".

The industry complained that the FSA had not shown there was a genuine problem around the sale of PPI, which covers debt repayments if the holder is ill or loses their job, or the way complaints about the product were handled. It added that the proposed solution was not "appropriate or proportionate", and it took issue with the regulator's estimates of the costs involved.

di3004

FSA head Hector Sants to 'get tough' on mis-selling

http://news.bbc.co.uk/1/hi/business/8563598.stm

The head of the Financial Services Authority is to announce plans for the regulator to toughen up protection for consumers over financial products.

Hector Sants will say the FSA needs to stop risky products being sold, rather than just pay out compensation when the damage has already been done.

Investors have been hit by a number of mis-selling scandals in recent years.

The Conservatives want to scrap the FSA and hand some of its powers to the Bank of England if it wins the election.

"We'll... need to step up our ability to see mis-selling before it has come too widespread, and that will require us to make more on site inspections both as FSA inspectors but also through mystery shopping where we pose as consumers," Mr Sants told the BBC.

"So I think we need to sample what is going on in the marketplace, get out there, get out in the field, be visible and not just wait until the consumers complain."

The BBC's business correspondent Nils Blythe says that the FSA's proposals are likely to be implemented whatever the structure of regulation in the UK under a new government.

Preventative action

Last month, Mr Sants announced that he would step down as head of the FSA this summer.


ANALYSIS
By Ian Pollock, personal finance reporter
It is amazing it has taken so long for the FSA to decide it should actually prevent dodgy financial practices getting off the ground.
What, you may ask, has the FSA and its predecessors actually been doing?

The past 20 years have seen millions of people mis-sold mortgage endowments, personal pensions and payment protection insurance.

Consumers complained, and the media reported, as these scandals emerged; the FSA only acted once the damage was done.

Now, with its future threatened by a possible Conservative government, it has decided to raise its game.

What a pity it has taken so long to accept what most people think regulation should be all about.

Before he goes, he is keen to push proposals through that give consumers better protection when buying mortgages, pensions and investment products.

In doing so, he hopes to restore public trust in the financial services industry after mis-selling scandals including personal pensions, endowment policies, split capital investment trusts and payment protection insurance, some of which predate the FSA.

Mr Sants told the BBC that the FSA should have stepped in earlier to prevent mis-selling in the past.

And he said the regulator must now vet risky products before they go on sale to the public.

"[We need to] analyse more comprehensively what individual firms are up to, and get more involved in the design stage [of financial product development]".

He added, however, that the FSA would not be "pre-approving" every product on the market, as there were simply too many of them.

Change 'disruptive'

On the Conservative plans to break up the FSA, Mr Sants said staff would be "unsettled" by the organisational change.


FROM THE TODAY PROGRAMME


More from Today programme
"Any structural change clearly comes with a cost, it is disruptive, fragmentation of agencies usually raises costs and that would be a significant operational price to pay for any change," he warned.

However, he stressed that the policies rather than the structure were more important.

And he argued that the regulator had become far more effective over the past two years and that the same people would continue to make the important decisions, no matter how the FSA was altered.

Shadow Treasury Minister Mark Hoban said Mr Sants was taking a step in the right direction:

"We recognised for a long time that people buying pensions, insurance, savings products, haven't received the protection they need and deserve, and we have argued for a single consumer protection agency to look after consumers, to bring together some of the work the FSA does and the consumer credit work the OFT [Office of Fair Trading] does," Mr Hoban said.

"But also we need a change in approach. We need the regulator to be much more proactive, to take action when they see a problem emerging rather than waiting until one has happened, as we have seen what has happened recently with payment protection insurance."

di3004

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/84/84.htm

ombudsman news

issue 84

March/April 2010
redress, regulation and mass claims.


This issue features an interview with Natalie Ceeney, our new chief ombudsman and chief executive, to whom I hand over on 22 March. As I revert to my role as corporate director, a key issue continues to be the implications of ‘mass claims’ – where thousands of consumers complain to the ombudsman service about broadly similar topics.
Next month sees the tenth anniversary of when the previously-separate ombudsman schemes for banking, insurance, investment etc came together. In our first year together, we received around 31,000 cases. At that rate it would have taken until 2032 for us to receive a million new cases in total. But we now expect to receive our millionth new case around the middle of 2010. In the past year we received around 160,000 new cases (a five-fold increase over ten years ago). The growth of mass claims has been a significant factor in this increase, with more than half of all the cases we have received relating to just six topics, of which payment protection insurance is the latest.
The Financial Services Bill proposes ways for dealing with mass claims – as well as new powers for the Financial Services Authority to create consumer redress schemes and new powers for the courts to deal with collective claims.
It is for Parliament to decide on the appropriate solutions – and consideration of current proposals may run out of time before the election. But all parties have accepted that the ombudsman service is currently having to carry a burden that it was not designed to bear.
We have joined with the Financial Services Authority (FSA) and the Office of Fair Trading in issuing a discussion paper: consumer complaints (emerging risks and mass claims). Responses should be sent to the FSA by 10 June 2010.
A key element in rebuilding consumer confidence in financial services is that financial businesses treat customers fairly – including handling complaints fairly and promptly, putting right recurring problems, and considering the position of all affected consumers, not just those who complain.
The paper considers the identification of new and emerging risks – to give regulators an opportunity of stepping in and nipping problems in the bud, thereby preventing new mass claims from arising. Examples are given of where that has already happened.
The primary responsibility for resolving mass claims lies with the regulators, who can consider across-the-board action to address the causes, whether or not affected consumers have complained – while the ombudsman service can deal only with individual complaints. But the law requires the ombudsman service to decide what is fair in the circumstances of each individual case – a potential mismatch that can only be resolved by legislation (such as the new section 404B proposed by the Financial Services Bill).
These are important issues, with great significance for financial businesses and their customers, as well as for our workload. The ombudsman service will play a constructive part in any new arrangements that emerge. But, pending some other solution, we will carry on deciding cases.

marshallka

http://news.bbc.co.uk/1/hi/business/8574956.stm

Page last updated at 15:40 GMT, Thursday, 18 March 2010
Cartel Client Review closed down by Ministry of Justice


Carl Wright is Cartel's managing director

One of the biggest claims management companies, Cartel Client Review, has been shut down by the Ministry of Justice (MoJ).
The MoJ has been investigating Cartel since February after complaints from customers that they were owed money.
Last week, Cartel's associated firm of solicitors, CCLS, was shut down by the Solicitors Regulation Authority (SRA).
Cartel is thought to have taken about £20m from up to 70,000 customers over the past two years.

nanna58

Sorry hope im n the right place!!!!
is ppi the same as payment break plan with barclaycard ?

thank you