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. 

Watchdog must punish parasite of mis-selling

Once again Jeff Prestridge of The Daily Mail has written about the scandal of PPI mis-selling.

In his article he argues:

"When Natalie Ceeney, head of the Financial Ombudsman Service, claimed a few weeks ago that some big banks were treating customers unfairly, she did not name names.

The issue related, inevitably, to payment protection insurance policies, which banks wrongly sold in their millions. Ceeney said the offending banks were  not looking fairly at complainants’ cases on their individual merits but were ‘managing complaints down in line with the money set aside for compensation’.
Ceeney did not single anyone out, but I bet one bank she had in mind was Lloyds. Even now, of all the complaints that Lloyds rejects that are then pursued by the Ombudsman, 86 per cent are won by the consumer. In other words the bank rejects far too many cases when it ought to pay up.

That conclusion should be clear from the figures alone, but last week an undercover operation gave it fresh emphasis. A Times reporter posing as a complaints handler for Lloyds revealed the bank did indeed have a deliberate ploy of fobbing off complainants to avoid paying compensation.

Let us hope the new Financial Conduct Authority will step in and penalise Lloyds’ directors for this. It should do so swiftly, especially given the determination of its boss Martin Wheatley to get tough on financial services miscreants.

But let’s make sure enforcement does not stop there, because there is another culprit in this shabby process – Deloitte. When the accountancy giant is not doing its day job of helping firms avoid tax, it provides services including complaints handling, which it was doing for Lloyds in relation to PPI.

In fact, a lot of Deloitte’s work arises when banks such as Lloyds get into trouble with the watchdog and need an ‘independent’ hand to sort things out. Deloitte’s standing has been so high that it has even undertaken work for the Financial Ombudsman Service and the savers’ lifeboat, the Financial Services Compensation Scheme.

But now Deloitte appears as guilty as the miscreant banks. Regarding the Lloyds scandal, Deloitte says no more than its role was to ‘process PPI mis-selling complaints in accordance with the bank’s policies and procedures’.

As I read it, Deloitte is saying that fairness and good practice do not come into the equation. Complaints handing is not about putting things right, it’s about doing whatever Lloyds says. Justice and integrity be hanged.

Lloyds lost any remnants of its once high reputation years ago. Now it is only known as a customer-bashing millstone hanging round taxpayers’ necks.

Deloitte’s reputation, after these revelations, deserves to head in a similar direction. If ever there was a parasite profiting from the mess of bank mis-selling, it is Deloitte. It deserves to be in serious regulatory trouble."

Banks Still Short Changing Consumers

Lloyds bank have this week admitted to shortcomings in their PPI complaints handling following revelations by an undercover reporter from The Times newspaper.

According to reports published by the BBC, a reporter for the national newspaper went undercover as a graduate trainee at a Lloyds complaints centre in London, which was at the time operated by Deloitte. The complaints centre employed around 1,300 staff to assess PPI complaints on behalf of the bank.

According to the reports, staff at the Royal Mint Court centre in London were trained to “play the system” and were instructed to reject claims on the basis that most customers would give up on pursuing a claim following an initial rejection. The reports also claimed that staff were trained to effectively turn a blind eye to fraud, while the entire operation at Royal Mint Court was based on the assumption that Lloyds salesmen had never mis-sold PPI.

For the bank, the allegations by The Times are another black mark on a far from perfect complaints record. In February this year the bank was fined £4.3 million by the Financial Services Authority (FSA) for delayed PPI redress payments, while more than 40,000 complaints were logged by the Financial Ombudsman Service against the bank in the second half of 2012 alone.

Lloyds have responded to the accusations, admitting that there were shortcomings in their complaints handling which have been identified and dealt with independently. The bank also announced that the contract with Deloitte was terminated in May this year.

Lloyds may have acknowledged their wrongdoings, but it seems that their admission has been sparked only by The Times’ exposé.  What’s more, as reported by This is Money, a Lloyds' spokesman, rejected the notion that customers have suffered any consequences as a result of their poor practice stating, “I don’t agree that anyone lost out as a result of what went on at Royal Mint Court. There was a 75% uphold rate from the centre and claims were constantly being checked”, a notion that is contradicted by The Times’ allegations and does little to work to rebuild trust for those customers let down by the bank.

Next week, MPs are set to debate the UK banking industry, with hopes that the parliamentary commission on banking standards will begin to improve standards within the industry, forcing banks to better serve the public and make amends for the likes of the Libor and PPI scandals.

As a claims management company specialising in reclaiming mis-sold PPI on behalf of customers, it is discouraging to hear about the latest development in Lloyds’ role in the scandal. However, the forthcoming Parliamentary commission on banking, is a highly anticipated movement which we hope will begin to prevent such failings and undo existing mis-trust between consumers and the industry.

Finally, a timely reminder arrived this week illustrating the very point that we have made here. One of our customers sent us their testimonial:

So the message is clear... and we will keep on fighting for consumers across the UK.

Why banks should focus on service

With the likes of TSB and Tesco poised to enter the retail banking sector, Anthony Thomson, founder and former chairman of Metro Bank, outlines why marketers must put the needs of their customers before the needs of the bank.

When I first had the idea to launch a new bank in the UK, back in 2007, it came from a consumer insight. Every piece of market research I had seen said that traditional high street bank customers were dissatisfied with the service that they received from their bank.

There were (and are) one or two notable exceptions such as First Direct, that have excellent customer service ratings, but the vast majority acted as if the only thing that mattered to customers was price (or ‘rate’ in bank parlance).

I believed that there was an opportunity to create a "new" bank that focused on customer service and convenience.

At the time many people said the idea was crazy. They argued that the barriers to entry were very high and that customers expressed little interest in changing banks. In fact, if I had a pound for every time someone told me "you were more likely to get divorced than change banks" I wouldn't have needed to launch a bank.

However, whilst research did indeed indicate that less than 5% of customers switched banks, there were a number of pieces of research that suggested, between 25 and 40% would consider switching if there were  a real alternative…

Metro Bank was about providing customers with that "real alternative". It opened its doors in July 2010 and over the past three years Almost 200,000 accounts have been opened in 18 Metro Bank stores (we call them stores as we think of ourselves as retailers.)

So why haven’t there been any new banks since then?

It is true that there were a number of barriers to entry at the time. Getting authorisation from (the then-regulator) the FSA was a long and difficult process. New banks were required to hold large amounts of capital and access to the payments system, which was owned by the big banks, was very difficult.

However, since then, most of those barriers have been reduced or even removed. The authorisation process has been massively simplified and shortened, the amount of capital new banks have to hold has been substantially reduced and the Treasury has announced that it will ensure new entrants have fair access to the payments systems.

Read the rest of this story at Marketing Magazine's website.

Consumer Confidence in Banks Still Rock Bottom

As the Financial Ombudsman Service (FOS) last week released its latest annual report, figures show that complaints to the service have rocketed over the past year, leaving consumer confidence at rock bottom, according to the Chief Ombudsman.

The FOS deals with complaints that are unable to be resolved between consumers and financial businesses and offers a free and impartial service to consumers. Over the past year the FOS has witnessed an unprecedented rise in queries and complaints from disgruntled customers over a range of financial products and services.

During the last financial year (2012/2013) enquiries to the FOS reached daily highs of 7,000, while more than two million initial enquiries and complaints were made to the body throughout the course of the year. Of these initial customer enquiries, 1 in 4 turned into a formal dispute with a record 508,881 new cases recorded during the same time.
 
As the total amount set aside to compensate victims of the mis-selling of Payment Protection Insurance (PPI) surpasses £15 billion, it is little surprise that PPI complaints accounted for 74% of the total complaints to the FOS during the last financial year contributing toward the surge in grievances.

While a colossal 140% increase in PPI complaints was recorded by the FOS last year, there was also a 92% rise in all cases. Chief Ombudsman Natalie Ceeney has suggested that consumers are becoming increasingly savvy, and as a result are taking action to complain, with a “much stronger consumer voice”.

Meanwhile, banks have come under fire for their inadequacy in resolving PPI grievances. Talking to the Mail on Sunday Natalie Ceeney explained that the FOS are seeing evidence of some banks “tightening the criteria” under which they will agree to compensate customers who were mis-sold PPI, making it increasingly difficult for consumers to reclaim what is rightfully theirs.

Echoing the Ombudsman’s concerns that banks are narrowing the terms of redress, Richard Lloyd of the consumer group Which? added “These shocking figures show the banks are still letting their customers down and failing to help consumers with legitimate claims to get the compensation they’re rightly owed”. Based on the FOS figures, the magnitude of customer upset is widespread, and the notion that banks are in fact making it increasingly difficult to claim is discouraging to hear.

The British Bankers Association (BBA) has on the other hand defended criticisms from the FOS and consumer groups, instead maintaining that unscrupulous claims from Claims Management Companies (CMCs) are to blame for the lengthy process in compensating customers.

While we can only speak for ourselves as a CMC, we can confidently say that submitting erroneous claims to lenders would be counter-productive for both our customers and business. We aim to resolve complaints as quickly and efficiently as possible, and while there may be select companies who operate under bad practice, at We Fight Any Claim we are focussed on obtaining redress for our customers.

Based on the figures released by the FOS last week, it is clear that consumers are becoming more pro-active in tackling their grievances with banks. While select banks have responded to the PPI scandal by assigning entire departments to the process of redress, there are many who, according to the Ombudsman are restricting the conditions of compensation for customers. With the prospect of a frustrating and lengthy claims process, many consumers may find themselves discouraged from pursuing a claim, a worrying prospect we hope to see prevented by appropriate action from the banks.

WFAC Staff Show their Charity Credentials

The We Fight Any Claim offices have been busy with charitable goings-on this month, as Scotty’s Little Soldiers and St David’s Hospice Care dropped by the Cwmbran based call centre.

Last week, WFAC welcomed a visit from Sergeant Luke Simmonds after staff raised more than £500 for national charity Scotty’s Little Soldiers.

Staff taking part in Dress Down Fridays donated their money to the cause throughout April, after WFAC employee, Vince Tutton nominated the charity on behalf of his Brother in Law, Sergeant Luke Simmonds.

Managing Director of We Fight Any Claim, Simon Chorlton, presents Sergeant  Luke Simmonds with the money raised

Later this month, Luke will captain the Armed Forces rugby team in a mammoth 25 hour game of rugby in aid of the charity. Due to take place on the 31st May, the event will be hosted at the Leicester Tigers rugby ground and is set to break the World Record for longest game of rugby ever played.

The event aims to raise funds for children of fallen soldiers, offering treats, trips and support to children dealing with the death of a parent in the armed forces. So far more than £30,000 has been raised through sponsorship and donations to the Scotty’s Word Record Fundraiser.

Also this month, St David’s Hospice Care paid WFAC a visit, as staff taking part in their annual Midnight Walk posed for photos ahead of the charitable event next month.

More than 30 employees are set to get involved in the sponsored Midnight Walk taking place on 14th June. Participants will walk through the night to complete an eight mile circular walk through Cwmbran, starting and ending in Cwmbran Stadium.

Some of the WFAC Staff who are participating in the Midnight Walk

Staff will also be making donations to the charity during June as Dress Down Friday contributions will go to the cause which offers care, respite and support to people facing life limiting and terminal illnesses.

WFAC would like to wish the best of luck the all those taking part in the Scotty’s Rugby World Record attempt, as well as all those staff walking in aid of St David’s Hospice next month!

Triple Dip Avoided but Bank Woes Continue

Figures from the Office for National Statistics (ONS) released last week indicate that the UK has avoided falling into a triple dip recession as figures show that the economy grew by 0.3% during the first quarter of 2013. The data represents the strongest year on year increase since the end of 2011, as GDP is has risen by 0.6% compared with the first quarter of 2012.

Described by Chancellor George Osborne as “an encouraging sign”, the growth in the economy has been widely received as positive news for the UK.  The banking sector on the other hand has endured some significant setbacks over recent weeks.

The Co-op bank pulled out of a major deal to buy more than 600 bank branches from Lloyds TSB last week, a move that was anticipated to bring competition to commercial banking in the UK. In the same week HSBC announced plans to axe more than 3,000 jobs in a bid to cut costs while Santander and Barclays announced their first quarter profits both fell by more than 25%.

Likewise, the Payment Protection Insurance (PPI) scandal was under the spotlight this month as figures from the Financial Conduct Authority (FCA) revealed that pay-outs for mis-sold PPI have now topped £9.3 billion. In addition, earlier this month the regulatory body released complaints data, highlighting the continued customer detriment caused by the scandal. In the second half of 2012 more than 2.1 million PPI complaints were recorded by financial firms, accounting for 63% of all complaints made to financial firms during that period.

Taking into account the number of complaints recorded by the FCA, the Financial Ombudsman Service (FOS) also received 264,375 complaints between April 2011 and April 2012, of which 157,716 were regarding PPI. Notably the FOS overturned 82% of PPI complaints in favour of the customer during the 2011/2012 financial year, reinforcing the argument that banks are erroneously rejecting legitimate complaints, forcing customers to take their complaint to the FOS which ultimately results in a lengthy and frustrating claims process.

While analysts have proposed that the growth in the UK economy will bring consumer confidence and encourage spending, it seems that the practices of UK banks are still leaving customers sceptical. Research by consumer body Which? found that only one in ten consumers trust the banking industry, while nine out of ten believe there should be a compulsory bankers code of conduct, suggesting that the weight of the PPI and Libor scandals are still very much in the minds of  UK consumers.

Although the research by Which? indicates that there is still much to do in terms of regaining customer trust in the UK’s financial industry, we should not lose sight of the positive news that the UK has avoided a triple dip recession, bringing optimism to UK consumers that the economy may well be on the road to recovery.

FCA Enters the Fray

Over on Money Marketing, Alan Hughes has written an interesting blog on the introduction of the FCA, which we would like to share with you:

1 April saw the introduction of the new regulatory structure comprising the FCA, PRA and Bank of England.

It has, thus far, passed off fairly quietly. Most of the rules in the FCA Handbook have remained the same or very similar and the new regulators have not yet had time to flex their muscles to exercise any new powers or even impose their regulatory stamp on the sectors for which they have assumed responsibility.

My consistent advice to my own regulated clients has been that the next year or so will be a particularly bad time to appear on the regulatory radar. Like any new broom, the new regulator will be keen to make its mark and possibly make an example of any miscreants to show that it means business. So a good time to keep your head down and your nose clean.

Shortly before 1 April the FCA, the most relevant regulator to the advice sector, published its Risk Outlook and its Business Plan for the coming year. This is always an opportunity to see what is taxing the mind of the regulator and what it is likely to be focussing on in the year ahead. In this case it is also an opportunity for the new regulator to set out it stall and how it may do things differently.

There is a lot for the FCA to improve upon. The FSA has lurched from one crisis to another with the latest blow being the Banking Commission report on HBOS which pointed out the obvious – that the FSA, with Sir James Crosby on its board, was hopelessly conflicted during the period when HBOS was setting itself up for later spectacular failure, as well as being asleep on the job.

The FCA Risk Outlook and Business Plan do throw up a few interesting items indicating its priorities and approach in the year ahead:

Product Intervention. This features heavily in both documents. The FCA is talking a good game on early intervention where they see “toxic” products being launched by firms. The plans are, however, a little short on detail. Leading up to 1 April the message on product intervention has been confused and it remains to be seen whether the FCA can make this work. If it can then early intervention may be a largely positive development for the advice sector which too often seems to be left carrying the can for the failures of others

Supervision. The FCA is promising to be a “…more proactive regulator, acting earlier and decisively….allowing us to address them [risks] before they cause harm”. It refers to the “Firm Systematic Framework” that it will use to focus supervision on the key conduct risks in firms. At the heart of the FSF is the question of whether the interests of customers and market integrity are central to how the firm is run.

Does this sound familiar to anyone? It appears to be TCF repackaged. The FCA also states that business model and strategy analysis will be included within the FSF. As the FSA never demonstrated a clear understanding of financial adviser business models, let us hope that the FCA gets a firmer grasp of those issues before implementing the FSF

Consumer Protection. As ever this will be a key priority. An issue taxing the FCA is that in a low interest rate environment consumers can have a “Poor understanding of risk and return” and be tempted to “take on more risk than is appropriate”.

This should sound a clear warning to advisory firms that the FCA is likely to continue to expect firms to put a lot of effort into ensuring that the recommendations made to clients are suitable.

A low yield environment can provide a great opportunity for firms to show clients the value of taking proper financial planning and investment advice but firms must remain vigilant, ensuring that clients have a proper understanding of any risk assumed and that the client’s capacity for loss has been properly considered by the firm (and indeed understood by the client themselves).

As ever, when it comes to mitigating the risk of giving advice a focus on suitability will remain key.

One danger if the FCA go in too hard on this issue (and indeed on product intervention) is that innovation in the market is stifled and firms are continually pushed towards a narrow band of advice that they fell able to give safely (and which is insurable) which overall would not be a desirable market outcome.

Enforcement. There doesn't appear to be much that is genuinely new in the FCA’s enforcement priorities. It does, however, state that “removing from the industry the firms or individuals who do not meet our standards” will be one of those priorities.

Again the FCA will have to match its tough talk with similarly tough actions. The multi billion pound industry-wide PPI misselling scandal did not result in the FSA pursuing any individual executives at the firms concerned whilst the FSA was always prepared to take on small IFA firms and their principals.

The FCA will have to show that it is capable of taking a more balanced approach and be prepared to take on individuals at the highest level in the biggest firms when the conduct of those firms falls so far short of what is expected that the executives must take responsibility.

In summary, the FCA is talking a good game but the acid test will be whether it can match that talk with the appropriate actions. A more effective and accountable regulator would be a positive thing for the financial services sector.

Whether some structural tweaking resulting in largely the same staff implementing much of the same rules and legislation through several new and different bodies can achieve the real cultural change required at the regulatory level remains to be seen. We will all be watching closely over the months and years to come.

Alan Hughes is a partner at Foot Anstey.

Complaints over PPI still at a High

The Financial Conduct Authority (FCA) last week released the latest complaints data, outlining complaints figures from financial services firms during the second half of 2012. Complaints to financial services firms between July and December last year reached 3.4 million, a 1% increase in comparison to the first half of 2012.

On the 1st April this year, the FCA, took over the role of regulating the financial services industry from the Financial Services Authority (FSA). The complaints data released last week, is the first set of figures to be released by the new authority since it took over the role earlier this month. The figures represent complaints made directly to financial services firms.

Barclays bank was flagged as the most complained about bank with more than 400,000 complaints recorded by the bank during the latter half of 2012. Lloyds TSB, Bank of Scotland, MBNA and Santander also ranked in the top 5 most complained about banks.

Payment Protection Insurance (PPI), once again proved to be a sore spot for customers, with 2.1 million PPI complaints recorded between July and December last year, accounting for 63% of all complaints to financial services firms during that time period.

Martin Wheatley, chief executive at the FCA has explained the importance and relevance of complaints data:

“Greater transparency drives greater competition, and the publication of the complaints data lays bare the track record of the UK’s financial institutions when it comes to resolving customer conflict.

“Not only does our data help consumers compare and contrast their current bank or lender, but it also boosts competition among firms too”.

Echoing Martin Wheatley’s comments, while the data points towards continued customer upset caused by banks and the industry as a whole, the FCA’s release of complaints data lays bare the poor performance of select firms which we hope will encourage competition amongst banks, effectively improving industry standards, and importantly the service provided to customers.

Further to this, the FCA also released papers earlier in April, outlining proposals which aim to improve banks’ treatment of consumers, through better regulation and the application of behavioural economics.

Banks will no longer be able to rely on the ‘buyer beware’ defence, as behavioural economics will help the FCA establish how consumers make important financial decisions, as well as banks’ sales practices leaving the onus of the mis-selling of products on the firm who sold the product.

Reflecting on the figures announced last week, as well as the proposed changes to the regulation of the industry; we are hopeful that the new regulatory body will work to bring a firmer watch over the UK financial services industry as a whole. Those banks which scored highly on complaints we also hope will endeavour to improve their service, to not only salvage their reputation but also better serve their customers.

All Change for Financial Regulation

Under the biggest overhaul of the UK’s financial services regulation in sixteen years, this week saw the industry say farewell to the Financial Services Authority (FSA) and welcome a new system of regulation. But what does this change mean for the UK’s financial services and importantly to you the consumer?

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) replaced the FSA on 1st April 2013 to regulate the UK’s financial industry in a bid to improve the regulation and conduct of the banks and financial services.

Since its introduction as a regulatory body by Gordon Brown in 1997, the FSA has been responsible for overseeing the regulation of the UK’s entire financial services industry. Criticised by current Chancellor George Osborne as ‘incoherent’, the FSA came under fire for failing to rein in banks during the banking crisis, as well as its shortcomings in preventing major banking scandals- notably the mis-selling of PPI and Libor rigging scandals, both of which surfaced under the watch of the FSA.

As part of the new system, the FCA and PRA, anchored by the Bank of England’s Financial Policy Committee (FPC), will replace the FSA’s former role in regulating the whole industry. With the replacement of the FSA by two new regulatory bodies, each will focus on regulating individual elements of the industry in attempts to better improve the management of the sector, improve standards and protect consumers.

Importantly for consumers, the FCA will aim to promote competition amongst banks and will have increased powers to ban products deemed dangerous for consumers. There are expectations that the changes will help to extinguish the irresponsible bank culture which has weakened consumer trust in banks and contributed towards the 2008 banking crisis. The PRA will govern banks building societies and credit unions, insurers and investment firms.

As part of the reform, the Bank of England will now be at the heart of the new regulatory system, as the FPC and PRA will both sit within the bank giving the Bank of England regulatory powers which had previously been removed under Gordon Brown’s implementation of the FSA. The FCA will remain outside of the bank, but will still maintain the authority to impose fines.

While the breakdown of the FSA into two new regulatory bodies has widely been accepted as a step in the right direction in effectively regulating the financial industry, the strategy hasn't been received without criticism. Critics have argued that the Bank of England will have excessive powers under the changes while others have suggested that the new structure will bring little change to the condemned FSA structure.

We can only hope that for consumers, the breakup of the FSA will prove beneficial in not only safeguarding customers and policing the banking and insurance sector as a whole, but it will also work to rebuild trust amongst British consumers who over recent years have been let down by the UK’s  widely criticised banking industry and culture.

PPI Scandal Creates Thousands of Jobs

At least 20,000 jobs have been created to deal with claims over mis-sold payment protection insurance (PPI), employment group Manpower has said.

These were jobs created by big banks, it said, and did not take into account those created by companies that act as middlemen for claimants.

The finding came in its quarterly look at the UK's employment situation.

Overall, it said the UK's employment situation was the best since the recession began.

Manpower, which surveyed more than 2,000 firms, said more employers were planning to increase their recruitment in the second quarter of this year.

The finding echoes official data, which shows record numbers are in work.

For more on this story, visit the BBC News website.

Banks Unsure over PPI Claim Deadline

Late last week we learned that the major British High Street banks were meeting to further discuss imposing a deadline for consumers across the UK to claim compensation for PPI that was mis-sold to them by their banks and others.

Sky News reported that

 "Britain's banks will on (last) Thursday hold crunch talks about a campaign to secure a deadline aimed at bringing the curtain down on one of the industry's worst ever mis-selling scandals.

I understand that executives from the major high street lenders have scheduled talks for Thursday about whether to press ahead with a "time-barring exercise" that would bring an eventual end to millions of compensation claims for mis-selling payment protection insurance (PPI) policies.

The discussions, which are being co-ordinated by the British Bankers' Association - the industry lobbying group - will be held against a backdrop of opposition from leading consumer affairs groups.

Sky News revealed last month that a number of the big banks had serious misgivings about the initiative, which would involve a huge advertising campaign to raise awareness of PPI mis-selling being launched sometime next year. A deadline for claims several months later would be designed to provide certainty about the final bill for the banking industry, which has reached more than £15bn and is set to rise further.

Key to the decision about whether to press ahead with the campaign will be the stance of Lloyds Banking Group, which had by far the biggest share of PPI policy sales, and which has so far set aside £6.7bn for compensation claims.

Industry sources said that Lloyds executives were sceptical about the merits of the initiative unless it had the backing of consumer groups. HSBC's support is also said to be wavering, although Barclays is understood to be enthusiastic about the idea."

For more on this story visit the Sky News website.

PPI Upset Persists as FOS Complaints Reach Record Levels

The Financial Ombudsman Service (FOS) has described a rise in complaints relating to Payment Protection Insurance (PPI) as ‘unprecedented’. But what do the latest figures from the FOS tell us about the PPI scandal?

This week the FOS revealed that PPI complaints have now reached record levels, as 211,885 new complaints were recorded by the independent body during the second half of 2012, an increase of 147% in comparison to the first half of the year. During the same period, between 1st July 2012 and 31st December 2012, the FOS dealt with an average of 2,000 complaints on a daily basis.

While the latest statistics may seem to suggest that many more customers are actively seeking redress from their lender, there is also the concern that banks are failing to resolve customer complaints in the first stages of a claim, resulting in an excessive number of complaints being referred to the FOS.

For Lloyds Banking Group, more than 40,000 PPI complaints to the FOS were logged against them during the second half of 2012. Black Horse, part of the same group saw 97% of complaints against them upheld by the FOS in favour of the customer. And they are not alone; other major banks within the group including Bank of Scotland and Lloyds TSB saw similar results as the FOS upheld more than 80% of complaints against them in favour of the customer.

While the FOS is appointed to resolve complaints which have failed to be settled by a creditor, it is important that the banks make every effort to resolve their claims to their best ability, before they are referred to the FOS. The FOS is under building pressure to deal with the mounting number of PPI complaints left unresolved by UK banks, and this year announced the recruitment of 1,000 additional employees to cope with demand.

Aside from the implications of unresolved complaints on the FOS, many customers who are owed compensation by their lender are being forced to endure a drawn-out and frustrating claims process as banks appear to reject claims unnecessarily, to be successively overturned by the FOS. A claim which is referred to the FOS can take between 3 and 12 months to be settled, in some cases longer, resulting in a prolonged claims process for the customer and needless costs for the banks.

As a Claims Management Company specialising in claiming back mis-sold PPI on behalf of customers we hope that the figures released by the FOS will encourage banks to improve the claims process and enable customers to reclaim what is rightfully theirs with ease and efficiency.

PPI complaints still at record levels

The financial ombudsman service is taking on 2,000 new cases a day following payment protection insurance (PPI) complaints, with numbers rising at "unprecedented" rates.

The service received 211,885 new PPI complaints in the second half of 2012.

These made up nearly three-quarters of the 283,251 new complaints sent to the ombudsman during the six months.

The service rules on cases that remain unresolved between a customer and a financial institution.

Payment protection insurance was designed to cover loan repayments for policyholders who became ill, had an accident or lost their job. Yet it was miss-sold on a massive scale to customers who did not want or need it.

Now, they are each receiving an average of nearly £3,000 in compensation, if their claim is successful. Refunding these customers has cost the UK banks a collective total of more than £15bn, following the latest provisions by the major banks.

Some claims are disputed by the banks and these often end up with the ombudsman.

Lloyds TSB Bank had the highest number of PPI cases referred to the ombudsman of any institution during the second half of the year, but the ombudsman found in the customers' favour in 86% of the cases against the bank.

This was a higher level than all of the other major UK banks.

For more on this story visit the BBC News website.

HSBC Sets Aside a Further £1.5bn for PPI

HSBC has reported a £13.7bn pre-tax profit for 2012 as the bank was hit by further misselling provisions of £1.5bn and its £1.2bn fine from US regulators last year.

The bank saw profits fall 5.5 per cent last year, down from £14.4bn in 2011.

The bank has set aside an extra £1.5bn in 2012 to cover compensation payments for the misselling of financial products, including £1.1bn to cover costs related to the misselling of payment protection insurance and £397m to cover costs relating to the misselling of interest-rate swaps. In total, HSBC has set aside £1.6bn to settle PPI-related claims.


HSBC also had to pay a £1.2bn fine from US regulators last year to settle a money-laundering inquiry.

For more on this story visit Money Marketing.

Tardy Banks Don't Deserve PPI Deadline

Good to see some sense being talked in the financial press over the weekend as Jeff Prestridge of This is Money brought us this piece:

The mis-selling of useless payment protection insurance may have been all but eliminated but the scars remain.

Last week, the Financial Services Authority hit Lloyds Banking Group with a £4.3million fine over PPI. Not for rampant mis-selling but for failing to pay compensation quickly enough.

Between May 2011 and March 2012 about 140,000 customers did not get their money in the required 28 days following notification from Lloyds that compensation was coming their way.

Not quick enough: Some Lloyds customers had to wait for more than six months for compensation

The fine did not take Financial Mail by surprise. In December 2011 and January 2012 we highlighted the problems many Lloyds customers were having in getting PPI compensation.

Indeed, at the time, we prised an admission out of the bank confirming that some customers were suffering lengthy delays, although it was somewhat economical with the truth.

It claimed that under five per cent of customers were affected by delays beyond 28 days. Yet as the details of the FSA fine confirmed last week, delays were being suffered by nearly a quarter of customers identified by the bank as eligible for redress.

And 8,800 had to wait more than six months for compensation to arrive. Unacceptable on any level.

In light of such dilatory behaviour, it seems a bit rich for the banks to be asking the regulator to impose a spring 2014 deadline for the public to submit all PPI claims.

The banks would be wiser putting all their energies into cleaning up the PPI mess they have created. Only then should they receive a receptive ear from the regulator.

Lloyds Fined for PPI Delay

Lloyds Banking Group has been fined £4.3m for delaying compensation payments to customers over Payment Protection Insurance (PPI) mis-selling.

The Financial Services Authority (FSA) said that 140,000 customers did not receive their payments promptly.

Hundreds of thousands of people have received redress after they were mis-sold PPI they did not want or need.

Lloyds, which has apologised, is the first bank fined by the FSA specifically for delaying payments.

The bank said it had been surprised by the influx of claims last year.

"We had not fully anticipated the volume of complaints to be processed at the outset and experienced some administrative errors as we scaled up our systems and processes," said a spokesman for the bank.

"We acknowledge that this led to some customers not being compensated on time and we apologise to those customers whose payments were delayed."

For more on this please visit the BBC News website.

More Woe for Banks as FSA warns on Misleading Advice

High Street banks stand accused of gambling the hard earned savings of customers by failing to stick to rules for financial advice, following an undercover probe by the City watchdog.

In another day of shame for the industry, the Financial Services Authority has published a devastating dossier exposing how salesmen at six top banks gave poor and misleading advice that put customer nest eggs at risk.

One bank, Santander, is understood to have been referred for further enforcement action by the regulator and today announced it has suspended its face-to-face investment advice service until further notice.


Read more: here.

Barclays Increase PPI Provisions

Barclays has increased the provisions to cover two mis-selling scandals by another £1bn.

It relates to the mis-selling of interest rate hedging products sold to small firms, and payment protection insurance (PPI) schemes.

Following a review, the bank said total provisions for the scandal involving interest rate swaps were now £850m, and £2.6bn for the PPI schemes.

The figure comes ahead of the bank's full-year results due on 12 February.

The Financial Services Authority (FSA) last week ordered the UK's major banks - Barclays, Royal Bank of Scotland, Lloyds, and HSBC - to review all their sales of interest rate hedging products, and provide redress where mis-selling occurred.

The products were offered to thousands of small firms - including pub owners, haulage firms, care-home operators and vets - when they asked their bank for a loan.

For the full story visit the BBC News Website