Universal Suspicion and Distrust Remains

Natalie Ceeney, Chief Ombudsman at the Financial Ombudsman Service (FOS), has this month warned of an “atmosphere of universal suspicion and distrust” between consumers and their lenders.

Latest complaints figures from the FOS, released last week, echo Ceeney’s warning, as PPI complaints to the independent body increased by 179% for the first quarter of 2013, in comparison to the same period the previous year. Of those complaints, 83% were regarding PPI, equating to 132,152 complaints.

In fact, the number of complaints recorded during just the first quarter of 2013, surpasses the total number of complaints received during the entire 2011/2012 financial year, and while it’s clear that customers are becoming increasingly savvy in taking up grievances with their bank or lender, the figures also represent wide spread mis-trust in the banking industry.

Consumer group Which?, this month released their customer satisfaction survey, exposing the best and worst banks according to the Great British public. The survey results, released last week reveal high-street giants, Halifax/Bank of Scotland, HSBC, Lloyds, NatWest/RBS and Santander all scored below the market average of 62% with Bank of Scotland picking up a score of just 50%.

The results of the survey which focused on customer service, value, transparency of charges and penalties amongst other factors are a timely reminder of the issues brought to light by the parliamentary commission’s recent report on banking standards. The commission are working towards better industry standards by proposing criminal charges for reckless bankers and an overhaul of irresponsible incentive schemes within banks of which the government have initially backed a number of proposals, offering optimism that the industry may in fact see some positive changes.

There’s also good news for consumers as the Claims Management Regulation Unit (CMRU) this week announced that during the past financial year (2012/13) 211 Claims Management Companies (CMCs) specialising in mis-sold PPI have been closed, with a further 285 receiving formal warnings. For those consumers wishing to make a claim against their lender using the services of a CMC it is positive to hear that the CMRU has taken adequate action to help eliminate rogue firms from the industry.

Chancellor George Osborne has meanwhile welcomed a growth of 0.6% in the UK economy in the three months to June. According to the Office for National Statistics (ONS), output grew in all of the construction, manufacturing, services and agriculture sectors and means that output now remains 3.3% below its pre-recession peak.

While of course the growth in the UK economy comes as good news, the data has also been met with caution, as Richard Lloyd, executive director at Which? commented, “Today’s confirmation of further growth is welcome but there is still a long way to go before this will be felt by consumers, whose confidence and spending power remains fragile.”

Ultimately, based on the latest FOS data there is still much work to be done in not only restoring confidence in the economy but also in restoring trust in the banking industry itself. With the proposals from the Parliamentary commission, coupled with a tentative economic recovery we can hope that these are the first steps towards a better future for banking, customers and the UK economy.

New Governor Brings Optimism to Economic Outlook

Mark Carney last week took up his post as the new Governor of the Bank of England, succeeding Sir Mervyn King to become the first foreign Governor in the institution’s 319 year history.

Described by Chancellor George Osborne as “the outstanding central banker of his generation”, Mark Carney’s appointment at the Bank of England carries great expectations in the hope that he will help to stimulate positive economic recovery following the 2008 financial crisis. 

Since taking up his position as Governor on the 1^st July, Carney, originally from Canada, has attracted media attention for his humble commute to work on the London underground as well as his apparent resemblance of a well-known Hollywood actor! He will earn a basic salary of £480,000, pension contributions worth £144,000 and receive a £250,000 a year housing allowance as Governor.

Having a successful history as the former head of Canada’s central bank, Carney’s role in the Bank of England is anticipated to bring an end to low interest rates, which have remained at record lows in the wake of the financial crisis. It is also expected that Carney, who last month stated “Without sustained and significant reforms a decade of stagnation threatens” will increase the stimulus program under his new position within the institution. However, at Carney’s first Monetary Policy Meeting held last week, both the Bank’s stimulus programme of quantitative easing, and interest rates remained unchanged.

The appointment of Carney comes just weeks after the parliamentary commission on banking standards reported on banking reform in the UK, which likewise stirred positivity amongst analysts and consumers. The report which was released on 19^th June, sought to rebuild consumer confidence in light of recent banking scandals. Amongst the proposals, better management of bonus and incentive schemes and the implementation of a prison sentence for bank managers found to be practicing reckless misconduct will aim to improve industry standards.

These recent developments are no doubt positive news for UK consumers who over recent years have endured economic austerity coupled with high profile and damaging banking scandals. Earlier this month the Financial Conduct Authority (FCA) announced that payments to people who fell victim to the mis-selling of PPI have now surpassed £10 billion- a milestone mark for the industry and the people who were wrongly mis-sold PPI by their creditor.  

At We Fight Any Claim, we are focussed on reclaiming compensation for our customers who were mis-sold PPI. After Lloyds bank last month hit the headlines for their mishandling of PPI complaints at one of their complaints centres, it is particularly encouraging to hear that consumer redress has now topped £10 billion. As Mark Carney steps up to become Governor of the Bank of England we are optimistic that coupled with the anticipated banking reform, the UK economy and Britain’s banks can now work towards better standards, and importantly begin to rebuild consumer confidence.