PPI mis-selling results in compensation of millions for consumers

Consumers in the UK have won back millions of pounds from banks and insurance companies as a result of being mis-sold insurance or becoming victims of administrative errors. According to figures the total amount won back by consumers who were mis-sold insurance or experienced errors in the last six months of last year was £284 million.

The reports show that the majority of these cases related to consumers that had been sold payment protection insurance, also known as PPI. This was a type of insurance sold alongside credit such as loans and credit cards, but came under fire several years ago after investigations found that it was being widely mis-sold by many providers of financial products and services.

The Financial Services Authority, the UK’s financial regulator, made these figures public recently, and also revealed that banks had received over 1.1 million complaints relating to unauthorised overdraft charges. Banks are now dealing with a huge backlog of these complaints following the removal of a ban on addressing the complaints, which were frozen as the bank charge case went through the High Court and then the Supreme Court.

Banks and insurance firms were said to have received 2.7 million complaints between July and December of last year, which compared to 1.6 million in the six months previous. The figures also showed that of these 45 percent were upheld in favour of the consumer.

The Financial Services Authority has, in the meantime, said that it will be coming down hard on banks that are found to be failing to deal with customer complaints effectively, and has warned that there are some banks that are trying to force customers to buy financial products that they do not want or need to shore up their own finances.

Tags: finance, Financial institutions, Insurance, financial products, bank

Saving guarantee safety net increased

The government has recently announced that saving guarantee safety net in the UK is to be increased to £50,000. Previously the 100% guarantee on savings applied to only the first £35,000 of savings with most financial institutions, and this compensation comes from the Financial Services Compensation Scheme. Prior to the Northern Rock fiasco last year the savings guarantee was far lower. Read more

Tags: Trotskyists, hector sants, banking sector, finance, Financial Services Authority, Financial institutions, savings guarantee

Get a good deal on your savings from a British bank

There was a time not so long ago when consumers in the UK who wanted to get a good return on their savings were looking more towards foreign banks that had recently entered the UK market for savings accounts, as they were pretty sure that this is where the best interest rates would be found. They were not wrong, as a number of foreign banks have stormed into the UK savings account market over the past couple of years, and have stormed to the top of the best buy tables by offering impressive interest rates in a bid to attract customers and keep the competition at bay. Read more

Tags: competition, slump, deal, Financial institutions, Money market, interest, housing slump, savings account

Record deposits in banks for April

According to recent reports April saw consumers in the UK deposit record savings in high street banks, with many rushing to take advantage of higher returns on deposits. Reports show that there was a surge in the level of deposits made by savers in the UK, with many trying to put money aside in order to try and combat the increases in living costs. However, the report also showed that only 50% of consumers see the need to put money aside in savings. Read more

Tags: consumers, ISAs, bank deposits, Financial institutions, high street banks, Offshore bank

Lenders urged to tighten checks

Although consumers need to take responsibility for their borrowing, lenders must tighten their credit checking measures, an expert has urged.

Simeon Linstead, head of personal finance at price comparison website uSwitch.com, made his comments following research which showed 84 per cent of people who successfully applied for credit cards over the last 12 months did not have to provide proof of income.

This means 4.8 million people did not have to prove the details they gave in their forms, while 14 per cent of successful applicants claim they were not asked about their income and outgoings at all.

Mr Linstead remarked: “It is too early to say if the amendments to the Banking Code are resolving these problems but there is clearly an urgent need for watertight measures to be put in place to ensure that the banks are lending responsibly.”

At the end of March, various amendments were made to the Banking Code, designed to ensure new commitments to responsible lending are made by credit providers.

Tags: comparison, amendments, credit checking, credit, outgoings, Banking, need, Financial institutions

Consumer increase care over their personal data

One of the major issues that have raised concern across the UK over recent months is that of personal data security, with many people concerned over the risk of identity theft and fraud. Read more

Tags: personal data, bank account, result, Financial institutions, credit, recent

Car modifications can increase insurance by 139%

Modifications to cars can increase insurance premiums by as much as 139 per cent, according to new research.

Findings from Confused.com revealed that for a 20 year-old male driving a VW Golf GTI 1.5 litre with no claims or convictions, a quote could differ by up to £1026.42 – or 182 per cent – depending on whether the vehicle was modified or not.

Among the most common modifications are spoilers, alloy wheels, tinted windows, lower suspension and strip under-lighting.

Will Thomas, head of car insurance at Confused.com, said that as modifications become more popular with young drivers, it is important that they are made aware of the ensuing cost of car insurance.

“Adding spoilers and tinted windows, for example, can not only dramatically increase car insurance premiums, but they can render car insurance void in some instances, especially when the driver fails to inform the insurer of any changes,” he continued.

Meanwhile, research from swiftcover.com shows that 96 per cent of British motorists leave gadgets on display in their vehicles, making their cars targets for thieves.

Tags: lighting, Financial institutions, quote, targets, car insurance premiums, vehicle, Service industries, Admiral Group

Insurers advised on risk models

With Hurricane Dean having caused havoc across the Caribbean in the past week, along with forest fires caused by the Mediterranean heatwave – not to mention the two disastrous floods in southern England last month and in June – this summer has been marked by an unusually high amount of natural disasters.

Insurance companies have been left to count the costs, with the two UK floods alone estimated to set them back £2.5 billion, according to figures from the Association of British Insurers (ABI).

Today, investments company F&C warned insurers that, with the seemingly higher incidences of natural disasters, they will need to adjust their risk models accordingly.

Associate director in the firm’s governance and sustainable investment team Vicki Bakhshi said: “The good news is that the sector is starting to wake up, and some risk models are now beginning to be amended. But the question is: which will change faster, the way the insurance sector operates or the weather?

“Despite the change in climate conditions, the risk models used by insurers are almost entirely based on historical patterns, not on climate science, and they do not take into account this upward shift in the risks,” she added.

“This means insurers might be underpricing risk. And some may also be underestimating the amount of capital they need to survive the kind of mega-catastrophes that are more likely to occur as a result of climate change.”

F&C also announced today that it has been conducting research into how insurance companies are responding to climate change, and will be publishing a report on it soon.

Tags: higher incidences, insurers, firm, report, UK floods

Current accounts help poor save money, union says

Current accounts are the safest way for those on low incomes to save money, credit unions said today.

ABCUL, the main trade association for the unions, said that these accounts also give lower-income customers access to direct debit, allowing utility bills to be paid more cheaply.

Spokesperson Lucia Webster said that they offered “a safe and accessible option for many people in the UK.

“It offers much more than a basic bank account from a high street bank.”

Ms Webster added that unions “offer a wide range of services to all sectors of the community, including people who may have difficulty accessing high street banking services.”

The Family Resources Survey from 2005/06 shows that 97 per cent of British households have some form of saving account, with fully 90 per cent of the population hold a current account.

Tags: Transactional account, high street banking, savings account, account, Financial institutions, Direct debit, offer, utility

Savers missing out on interest

The Bank of England yesterday (June 7th) froze interest rates at 5.5 per cent but many savers would not have seen any benefit if the rate had risen anyway.

Despite there having been four rate rises since August 2006, the Post Office says that many high street savings providers have not been passing on the benefits.

Interest rate rises are generally viewed as having a negative impact on most people, as those with a loan, mortgage or credit card see their repayments increase.

However, people with savings benefit from a rise in the base rate but only if the provider passes on the new rate.

“Banks and building societies are quick to raise mortgage rates in line with base rate increases, but less inclined to pass on the benefits to their savings customers,” said Richard Norman, head of savings at the Post Office.

“There have been four base rate rises in the last year and the majority of savers have missed out on the full benefit of these.

“Although the Bank of England decided to hold rates today, further rate rises are expected. To make the most of their money, savers need to ensure they check which accounts will consistently pass on rate rises and switch,” he added.

Much like a mortgage with a fixed-rate period, many savings providers offer customers a guarantee that the interest they earn will increase in line with inflation for a specified period of time.

Tags: rate period, mortgage, period, money, Financial institutions, england, interest rate, Post Office."There