Loan hikes have made millions for UK banks

According to a recent report banks in the UK have managed to make millions of pounds as a result of sneaky hikes on loans and other forms of borrowing. The claims have been made following an investigation by a finance group, which shows that since they started making huge losses during the credit crunch the banks have been merciless on their attack on consumers in order to try and shore up their own finances.

It is claimed that banks have been making up the losses on their books by slyly increasing the rates of interest charged on borrowing whilst at the same time reducing the rate of interest on savings accounts to the point where some savers are earning practically nothing on the money that they put into their savings.

Officials claim that banks are getting away with this because of the rock bottom base interest rate, which still stands at just 0.5 percent, which is the lowest it has ever been in the history of the Bank of England, and it has been at this level for well over a year now.

The low base interest rate has fooled many people into thinking that borrowing is cheap at the moment. However, what has in fact happened is that the gap between the base rate and the rates that lenders are charging has expanded resulting in what has been described as an eye watering margin. The fact that the base rate is so low, coupled with the fact that many of these banks have been bailed out by the taxpayer, appears to have provided no benefit to borrowers.

An official from the consumer campaign group Which? said: ‘We paid for the banks’ failures once when we bailed them out and now they are getting a double hit by taking more of our cash.’

Tags: Economic history, Loans, interest rate, investigation, credit crunch, finance, banks

Electrical goods websites accused of being misleading

It has been claimed in a recent report that a large number of websites that are selling electrical goods are actually misleading consumers. Read more

Tags: solution, Europe-wide problem, way, electrical retailers, electrical goods. online electrical goods, investigation, cost, EU Consumer Commissioner

Many bank staff as confused as customers about cheques

Following a recent investigation it has been revealed that many bank staff members are as clueless as many consumers when it comes to the clearance times for cheques. The problem was brought to light in a recent investigation by the industry watchdog, the Banking Code Standards Board. Read more

Tags: bank, Banking, cheques, Numismatics, customer facing staff

Increase in PPI complaints results in further investigation

According to a recent report a huge rise in the level of complaints being received in relation to PPI, or payment protection insurance, has resulted in calls for further investigation into the sale of this type of insurance cover. This cover is commonly sold alongside credit such as loans and credit cards, and the purpose of the cover is to meet repayments on the debt for a set period of time if the policyholder cannot work due to sickness, injury, or redundancy. Read more

Tags: payment protection insurance, financial ombudsman, financial industry, industry group, redundancy, fsa, work, investigation

FSA to publish new PPI guidelines

The UK’s financial regulator, the Financial Services Authority, is to publish new guidelines in relation to Payment Protection Insurance on its website next year.

Payment Protection Insurance, or PPI, has been at the centre of controversy over the past year, with many claims that this type of insurance was being forced onto borrowers, mis-sold, and in some cases added onto finance deals without the consumers even knowing about it. Banks and lenders make a lot of profit on the sale of PPI, but in many cases customers end up with expensive policies that they cannot even benefit from.

Payment Protection Insurance is designed to help those taking out finance, such as credit cards, loans, and other forms of credit. The idea behind the cover is that consumers will be covered for a specified period in the event that they are unable to work and therefore make repayments due to redundancy, illness, or accidents. However, research was carried out by various agencies, and the industry came under severe criticism for the inappropriate sale of policies amongst other things.

Many people have ended up purchasing PPI that is not suited to their needs as a result of this mis-selling, and the FSA aims to steer customers towards suitable plans based on their needs via the website. Customers will be asked a number of questions on the site, and will then be able to view a choice of suitable policies so that they do not end up purchasing inappropriate PPI.

In addition to helping consumers to find the right PPI policies for their needs, the FSA has also promised that it will be taking far more stringent action and imposing far higher fines on companies that are found to be mis-selling Payment Protection Insurance in the future.

Tom Smith
4th November 2007

Tags: ppi, finance, investigation, payment, Insurance, cards, credit, misselling, fsa

Capital One fined by watchdog

Credit card provider Capital One has been fined £175,000 by the Financial Services Authority (FSA).

The fine comes as the industry watchdog found that the bank had inadequate controls regarding selling Payment Protection Insurance (PPI) to customers.

PPI is taken out approximately 7 million times each year, and covers debt repayments in case of an accident, sickness or unemployment.

While PPI can prove useful to those in debt, the FSA had found earlier this month as part of its ongoing investigation into the cover that some financial services companies were making its purchase a “default” choice for customers, using techniques such as a pre-checked box purchasing the cover on online application forms.

The regulator ruled that, in the period January 2005 to April 2006, Capital One did not provide adequate information about the policy to 50,000 of its customers, leaving its terms unclear.

The FSA conceded, however, that the bank did implement remedial measures before its ruling, which included compensating inadequately informed customers to the tune of around £3 million.

Tags: sickness, online application, application forms.The regulator, fine, investigation, GBP, british bankers association, purchase

UK banks investigations widen

Regularity bodies in the UK are set to widen their studies into banking and bank charges after months of investigations into bank charges have already been carried out.

The Office of Fair Trading and other financial regulators in the UK have been looking into the fairness of extortionate charges for exceeding an overdraft, having a returned cheque, or having a returned direct debit. Banks have been charging up to forty pounds or more in some cases in these situations.

The bank charges have been branded unlawful and unfair by regulators, and as a result many consumers have been able to reclaim their charges going back up to six years, and sometimes amounting to thousands of pounds. The OFT is likely to make a decision later this year on what is deemed a fair charge for administration that costs the bank between £2 and £5. In the meantime, consumers continue to try and reclaim their past charges.

Now that the study and review has been extended it is being described as one of the largest investigations into banking ever carried out. As part of the extended investigation regulators will be looking into the costs of banking, how the end of free banking might affect consumers and the economy, and will also continue to assess the fairness of bank charges. It is thought that placing a low ceiling limit on these charges could result in many banks charging all customers a monthly fee for holding a current account.

With regards to extending the investigation one OFT official stated: “This will provide the necessary context for assessing the fairness of unauthorised overdraft and returned item charge before we apply the law in this area.” 

A National Consumer Council official also commented on the situation, stating: “Banks must deliver a fair deal for consumers and stop dragging their customer service reputation further into the mud by waiting for regulatory action.”

Tom Smith
15th May 2007

Tags: charges, costs, oft, accounts, bank

Zurich launches anti-fraud team

A new investigation team has been established to deal with fraudulent motor insurance claims.

Zurich has set up the team in order to tackle the crime and the firm feels that having a group of professionals who are dedicated to fighting fraud is the way forward.

It means that there will now be motor fraud specialists who can focus completely on eliminating fraud and do not have to worry about dealing with other claims as well.

“The main objective of this scheme is to ensure we enable the teams to focus solely on the elimination of fraud,” said Scott Clayton, claims fraud and investigations manager at Zurich.

“The Insurance Fraud Bureau findings show that approximately 22,500 staged and induced motor accidents have taken place across the country since 1999 – this figure has increased year-on-year during that period.”

By cracking down on insurance fraud, Zurich believes that it will be able to offer benefits to its law-abiding customers by cutting premiums.

“By making it more difficult for individuals to commit fraud, we hope these new teams will act as a deterrent to would-be criminals and reduce the extra five per cent premium paid charged to honest customers to meet the cost of fraudulent claims,” said Tony Emms from Zurich.

The establishment of the anti-fraud team is good news for people looking to get car insurance, not only because of the potential financial benefits, but also as insurance fraud is often linked to other crime.

Tags: investigation, insurance fraud bureau, crime, emms, group, Zurich Financial Services, cent premium