Should Borrowers ‘Do Their Own’ PPI Claims?

UK Consumer groups Which? and MoneySavingExpert have come together to launch an advertising campaign to encourage victims of mis sold PPI to ‘do their own claims’ rather than using PPI Claims Companies… and get this, they’re also planning to hold a “PPI summit” with the big UK banks and credit card providers with the aim of working together to “restore trust in the reclaiming process”.

This story has been published by all household news channels on the internet and in hardcopy over the past few days. Initially, we didn’t really know how to respond to it as anything that raises awareness of mis sold PPI and encourages people to claim back PPI is surely a good thing… right?

The problem we have is that they’re all focusing their attention on PPI claims companies… again… rather than putting pressure on the banks to repay their customers. If it wasn’t for the work done by some of the better claims management companies, the majority of people who have now successfully reclaimed their money… would never have done so and the mis sold PPI scandal would not have become so prominent.

The banks are still delaying the settlement of PPI complaints without punishment and would love nothing less than for PPI claims companies to disappear altogether… as this would mean that the number of people reclaiming PPI would be reduced by upto 75%.

So if Which? and MoneySavingExpert are going to see this through to the very end… until all victims of mis sold PPI have been refunded then we welcome the move. But we live in a cynical world, so please bear in mind that nobody does anything for free not even these so called ‘consumer champions’. The fact that they’re holding a summit with the banks to discuss how to eliminate PPI claims companies is not supported by us at all.

So… do we think that you should, as Which? and MSE so eloquently put it, do you own claims? Well, that depends on you really. The majority of people that use claims management companies do so because they don’t have the time, patience or confidence to deal with the banks themselves. So, if you feel confident that you can see it through then you should consider it as an option.

We recommend that you use a reputable claims management company because this will ensure that you get back exactly what you are owed. The FOS, FSA and FSCS have all come out and said that you are not likely to receive anymore money if you use a CMC compared to doing yourself. And, the MOJ has also told CMC’s that they cannot say that they will get you more than if you do it yourself… but we’ve heard form countless readers and CMC’s that the banks regularly offer less money than is actually owed. We spoke to one bank employee who told us that if he’d had a fight with his girlfriend the night before, then all PPI claims received the next day were going to be rejected!

Please consider your options carefully before deciding on which course of action to take. The banks want you to claim yourself because they’ll get away with paying you less and will receive less complaints overall… saving them £billions. But DO NOT chose a PPI Claims Company that resorts to cold calling to obtain your business and do not pay anything upfront to start your claim.

Barclays Admits Error In Mis Sold Interest Rate Swaps

Barclays has today, admitted a second serious error in relation to the sale of interest rate swaps. The bank is now fighting claims that it mis-sold hedging products to small and medium-sized business customers.

The bank has now openly stated that it has mistakenly mis sold interest rate hedges to some small business owners, using a presentation that should only have been shown to professional investors due to the complexity of the product.

A spokesman for Barclays is quoted as saying that “The wording was included in some presentations by mistake,” but added that it “did not influence the way we dealt with our customers”.

This recent admission of error by Barclays, is the second serious mistake uncovered, following a month-long investigation by The Daily Telegraph, that Barclays and other UK banks had profiteered by selling complex derivative products inappropriately to small business owners with no investment experience – no surprises there then!

Last month, Barclays was forced to apologise to the Financial Services Authority (FSA) after evidence was uncovered that revealed the bank had demanded that its clients withhold information from the regulator over the sale of hedging products.

After the revelation, the FSA forced Barclays’ investment bank to write to the businesses affected, telling them they were no longer bound by “confidentiality agreements”.

The latest error will add to the pressure on Barclays amid growing concerns at the potential scale of mis-selling claims against British banks as the banks are still dealing with an avalanche of PPI claims from customers who were missold payment protection insurance.

MOJ to Launch Investigation into PPI Claims Companies

The Ministry of Justice MOJ) has today launched an investigation into PPI Claims Companies following a deluge of invalid PPI compensation claims filed on behalf of borrowers who were allegedly mis sold payment protection insurance (PPI).

The MOJ, which regulates claims management companies, has apparently received a large number of complaints from banks over the large number of complaints, form PPI Claims Companies, where there was no PPI on the policy.

Latest figures show that UK banks are now rejecting up to half of all ppi claims relating to mis-sold PPI after a substantial increase in the number of complaints submitted in the past few weeks.

Up to 80% of these come through claims management companies, who are actively encouraging borrowers to claim back PPI with advertisements, emails and text messages as part of their marketing strategies.

One bank cheif is quoted as saying “It’s delaying things horribly… The sheer volume of submissions is distracting us from the process of paying out on valid claims.”

The PPI scandal first came to light several years ago, but the banks only really started paying the process of paying mass compensation last May after they gave up a legal fight against the FOS in their Judicial Review.

Rejection Rates from the big 4 UK Banks are s follows:

Santander 40%
Barclays 40-50%
HSBC 33%
Lloyds 33%
RBS 20%

The banks are calling for changes to the way claims management companies are regulated, and although these figures may seem alarming… lets not forget that 75% of PPI complaints rejected by the banks are infact being upheld by the Financial Ombudsman Services (FOS) – which raises questions about the figures being released by the banks and their reasons for doing so.

Let’s be absolutely honest here… there are a number of “scammers” out there posing as claims management companies that should have their licenses revoked (we will be reviewing some on Financial Reform over the coming weeks… so watch this space). But the fact that 80% of borrowers are using the services of PPI claims companies to pursue their PPI reclaim suggests that the majority are doing a fantastic job and that without them, the banks would have got away with not having to repay the money they scammed from their customers in the first place.

The banks don’t want to pay the money back. They purposefully reject a large number of claims to divert the pressure on the FOS who are already over stretched. They fought tooth and nail to avoid having to repay the money after admitting they’d mis sold PPI, and are now using whatever delaying tactics they can to minimise their losses

The regulators – the MOJ, the FSA, the FOS and the FSCS are unfortunately treating the banks with kid gloves and focusing their attentions on claims management companies rather than working on creating a process to streamline the claims process. There are still thousands of claims, which were placed on hold during the judicial review, that have yet to be settled. It’s a bloody joke!

Are Credit Cards Right For You?

Let’s face it, in this day and age, consumers need all the advice they can get on managing their finances and avoiding the pitfalls presented by over-spending! Credit cards can be of great service to people, but they can also put you in really hot water, in terms of debt! Keep reading for great advice on the best way to use your credit cards.

When getting a credit card, a good rule to follow is to charge only what you know you can pay back. Yes, many companies will require you to pay only a certain minimum amount every month. However, by only paying the minimum amount, the amount you owe will keep adding up.

When signing up for a credit card, be sure that you check out what all of the penalties are if you miss a payment. This is of great importance because some companies not only will fine you, but they may also permanently increase your APR to an extremely high percentage.

Never use a credit card to buy things you can’t afford. Just because you want a new flat-screen TV, doesn’t mean a credit card is the best way to buy it. You will pay loads of interest, and the monthly payments may be out of your reach. Leave the store, think over it for a day or so, and then make your decision. If you still plan to buy it, the store’s in-house financing usually offers lower interest rates.

Be sure that you only apply for credit cards that you know that you will need now, as well as, in the future. This is important because having too many credit cards may lead to irresponsible spending and living outside your means. Doing so may very well cause you to become buried in debt and have a hard time paying it off.

If you ever have a charge on your card that is an error on the credit card company’s behalf, you can get the charges taken off. The way you do this is by sending them the date of the bill and what the charge is.

If you have a credit card, add it into your monthly budget. Budget a specific amount that you are financially able to put on the card each month, and then pay that amount off at the end of the month. Try not to let your credit card balance ever get above that amount. This is a great way to always pay your credit cards off in full, allowing you to build a great credit score.

Consider using your credit card for major electronic purchases. Some cards offer free buyers protection plans when consumers use a credit card to purchase electronics, and these plans often exceed the standard warranty. Just make sure to pay the purchase off as soon as you can to avoid accruing large interest amounts.

Once you close a credit card account, be sure to check your credit report. Make sure that the account that you have closed is registered as a closed account. While checking for that, be sure to look for marks that state late payments. or high balances. That could help you pinpoint identity theft.

If you are going to be applying for your first credit card ever, you must be aware that your credit limit will probably be low. Many beginners think that with their good credit, they will get a high limit. In reality, companies want to make sure you can afford to pay your current limit, before offering you a higher one.

As previously stated, consumers are often alone in the financial jungle and that includes being subject to incredibly high interest rates from credit card companies! The best ways to use credit cards has been covered in this article and hopefully, you have found this information very useful and applicable to your everyday spending habits.

PPI Claims Figures Released by the Financial Ombudsman

According to recent figures released by the Financial Ombusdman Service (FOS), Barclays was the most complained about bank in the last six months of 2011, with nearly 12,000 complaints brought by it’s customers. The bank, also topped the FOS’s list for the highest number of payment protection insurance (PPI) complaints, 99% of which were found in claimants favour.

Latest figures released by the FOS show that 84% of cases brought against Barclays generally were upheld by the ombudsman - compared with an average of 72%from the other banks.

Barclays, which agreed to set aside £1 billion to cover mis sold ppi claims, issued figures last week showing a 67% increase in the total number of complaints received by its general insurance and protection business in the second half of last year (2011).

The bank previously has previously stated that excluding the PPI claims figures, the total number of complaints actually dropped by 29% in yer on year compared with 2010 and has said that tackling complaints has become a “top priority”.

Some of the other banks did not fair much better, as a huge 99% of PPI complaints involving MBNA Europe Bank and Lloyds TSB Bank were also upheld in favour of the customers, while the uphold rates for Lloyds Banking Group divisions Black Horse and Bank of Scotland were almost as high at 98%.

There were however, some large disparities between the banks in terms of the percentage of PPI claims upheld, with only 7% involving the Nationwide Building Society being resolved in customers’ favour.

The ombudsman has said it generally sees large a volume of complaints when banks either do not have the resources in place to deal with the complaints or when they are not handling the complaints properly.

10 most complained about banks according to the FOS, with the number of complaints and the uphold rate:

1. Barclays Bank, 11,524, 84%

2. MBNA Europe Bank Limited, 9,185, 94%

3. Lloyds TSB Bank 7,467, 87%

4. Bank of Scotland, 6,082, 76%

5. Santander, 5,439, 55%

6. Capital One (Europe), 5,375, 12%

7. Black Horse, 5,252, 93%

8. HSBC Bank, 4,430, 80%

9. Nat West Bank, 2,737, 85%

10. Nationwide Building Society, 2,513, 12%

10 complained about banks for PPI according to FOS figures, with the uphold rate:

1. Barclays Bank, 6,975, 99%

2. MBNA Europe Bank, 5,377, 99%

3. Capital One (Europe), 5,057, 11%

4. Black Horse, 4,999, 98%

5. Lloyds TSB Bank, 4,257, 99%

6. HSBC Bank, 2,813, 87%

7. Bank of Scotland, 1,954, 98%

8. Nationwide Building Society, 1,778, 7%

9. Clydesdale Bank, 1,336, 57%

10. HFC Bank, 1,078, 93%

Most complained about banks with the number of complaints made to the FOS:

1. Lloyds, 20,310

2. Barclays, 12,273

3. MBNA, 9,903

4. Royal Bank of Scotland, 6,553

5. Santander UK, 6,202

6. HSBC, 6,190

7. Capital One, 5,375

8. Nationwide, 2,513

9. National Australia Group, 1,829

10. Citibank, 1,572

Increased Tax Rate Fails to Improve Revenues

As the government faced greater spending cuts, David Cameron’s predecessor decided to increase the marginal tax rate. In theory, this was supposed to help the government substantially improve revenues so that they wouldn’t have to implement austerity measures to the same degree.

To Cameron’s disappointment, the increased marginal tax rate is unlikely to create the rebound in revenues that many people were expecting. In fact, it appears that the increased tax rate has actually decreased revenues by about 5%. The filings that were initiated on January 31 show that revenue is down almost half a billion pounds.

This months reports are the first indicator that Cameron and the Inland Revenue Service have to decide how effective the tax increase will be. The tax year will end on April, but the self assessment is due by the end of January report. Therefore, the first month of the year is the first time that the Inland Revenue Service can see what impact tax increases hold.

These figures indicate that Gordon Brown’s decision to implement these taxes has not yielded the promising results many hoped for. However, Cameron may face criticism from his own party for choosing to keep them in place.

The government doesn’t have many historical indicators to suggest that increasing taxes are going to have a major impact on revenues. Former Chancellor Lawson agreed to cut the tax rate from 60% to 40% nearly 30 years ago. The rate has not been increased since.

The biggest reason for the tax increase was to make sure the bankers paid for the damage they caused during the financial crisis. Cameron himself made a more unbiased statement, but many people insinuated that he felt the same way. Although the financial crisis initially originated on Wall Street by larger American banks, UK citizens haven’t felt any less animosity to their own bankers or held them any less accountable for their own mistakes.

One of the problems with the new tax system is that the richest citizens seem to have been able to shift their money overseas to avoid paying their taxes. This could be an indication to the government that they would need a new policy if they intended to make sure they could increase their tax revenue to any meaningful degree.

Unemployment Rate Among College Grads and GCSE Holders Equal

Traditionally, most people have gone to college with the expectation that it would improve their chances of getting a job afterwards. That perspective has been accurate for a long time. However, citizens who based their decisions on that data seem to be sorely disappointed.

New surveys from the Office of National Statistics have shown that the unemployment rate among college graduates and high school drop outs is now the same. Data from 2011 said that 20% of 18 year-olds who left school at the top of their class were unemployed, while the unemployment rate for all university graduates was 25%. The unemployment rate for those students who received a graduate certificate of secondary education was 26%.

These figures point a concerning perspective for the younger generation. Studies released last month found that the younger generation was forced to start their career later in life than previous years due to the financial challenges they have undergone.

However, the figures are significantly more encouraging for graduates who are 24 years of age or older. Also, college graduates in that age group have a little higher than their peers. About five percent of college graduates over 24 were unemployed, compared with seven percent who finished high school in the top of their class. About 13% of those with a GCSE were unemployed.

A spokesperson from the Higher Education Careers Services Unit said that the statistics need to be taken in their appropriate context. The number of students who left their high school at the top of their class was significantly smaller than the number who attended college. Also, even though the jobs market is struggling just as much as it was before the recession, most graduates are able to find work within six months.

Although there are some defining features in the report, these statistics foreshadow a number of challenges for the rising workforce. A new economic infrastructure will be needed to get them back to the pre-recession levels. However, the unemployment situation still isn’t as bad as it had been during the recession of the 1980s.

Stephen Isherwood stated his position on the importance of younger workers clearly deciding whether or not they should attend university. Rather than succumb to the idea that attending college is the best approach to take, they should try to understand the importance of creating a future for themselves that they are going to be able to be comfortable with.

Greece May Be About to Receive Second Bailout

The economic community is becoming even more concerned over the developments taking place in the Eurozone. Greece’s ability to avoid default depends on its ability to receive a second round of bailouts from the International Monetary Fund and the European Financial Stability Fund. A decision on the new round of bailouts is expected to be delivered on Monday.

According to Christine Lagarde, the new chief of the IMF, Greece has made very significant progress in putting itself back on the road to recovery and paying down its debt. However, she argued that more progress is needed and Greece will need another round of bailouts to recover from the financial burdens it is now facing.

Greek officials will have to meet later on Monday evening to decide what measures they will need to take for the banks to accept a voluntary haircut on their loans. This is one of the requirements before Greece will be able to receive another bailout. The new arrangement between the banks and Greece will involve a 100 billion euro cut on Greek debt.

The countries that are instituting the bailouts are also insisting on having more control over Greece’s budget. Although Greece has raised objections over being forced to implement new austerity measures, other countries argue that they are going to have to accept the terms if they have any expectation of receiving any more bailouts.

Despite its objections over some of the new measures, Germany said that Greece is willing to allow the money to be placed in a separate account rather than being handed directly the country’s treasury. This would give lender countries the ability to control when Greece received disbursements.

Greece has already begun to implement the austerity measures demanded by the IMF, EFSF and the lending nations. They made 325 million euros in additional spending cuts. This has proven to be highly unpopular for Greek citizens, who have already begun protesting on the streets of Athens. Regardless of how unpopular these austerity measures are becoming, they are a necessary part of the bailout package. They may prolong the depression Greece is currently undergoing, but without them Greece would have to deal with calamity of its first sovereign default.

What is the New Student Loan Repayment Plan and How Will it Affect Consumers?

The new regulations over student loan reform have created a number of challenges to both current and aspiring students. Many students were concerned over a new repayment plan that was proposed by Vince Cable, David Cameron’s Business Secretary. Cable’s plan called for a 5% penalty on all students attempting to repay their student loans before the end of the term of their loan. This idea was implemented with the intention of preventing wealthier students from escaping the interest payments they would otherwise be forced to make on 30-year loans.

That repayment scheme has since been killed. According to Guardian sources, Cameron has apparently negotiated a new arrangement with Cable whereby Cable will be able to decide who to appoint to be the University admissions tsar. However, it is also possible that the tens of thousands of people who protested the idea are also responsible for creating the support needed to strike down the bill.

Under the new plan, students will be eligible to receive £9,000 a year for tuition. They will also be given maintenance loans for housing, which will be higher for students living in London. Students coming from families earning less than £25,000 a year will also be eligible for a non-repayment grant of £2,906.

Students taking out loans between September 2012 and September 2016 will be charged 3% interest. However, they will not need to repay their loans until they have started to earn an annual salary of £21,000. After that point, students will be repaying their loans based on their salary.

Many parents are asking how to manage the finances most appropriately. They have been informed that it is best to apply for these loans first rather than taking out a personal loan for their children. The interest will be much lower on the student loans. Also, students are discouraged from investing their maintenance loans, because the interest they will be paying on them is likely more than what they will earn after putting that money into savings.

Most families are happy to hear that the repayment plan Cable proposed had been killed. Although Cable stated that the loan was intended to go after wealthier families, lower and middle class families were going to be hit hard by it as well.

However, it is unclear whether or not this arrangement worked out for the best, because Cameron will now give Cable the discretion to appoint Les Ebdon to the Office of Fair Access. Many people are concerned that Ebdon could be a serious liability to the country.

U.S. House Passes Insider Trading Ban

The United States House of Representatives has recently passed a new bill that is going to curb insider trading among lawmakers. The bill originated in the United States Senate and was signed a week before the House of Representatives approved it. The bill is now headed to the desk of President Obama, who has promised to sign it as quickly as possible.

The Stop Trading on Congressional Knowledge Act is intended to stop cases of financial fraud by individuals who have access to Congressional materials. However, the bill has been somewhat limited in its scope after some criticisms. Congress has removed a few words that stipulate that insiders in Washington will not be barred from selling information. Clearly, this creates loophole for many people who are interested in buying and selling information on Wall Street, but the bill is expected to be changed in coming months. At the very least, most people say it is a step in the right direction.

A provision is added into the bill which encourages Congress to impose new regulations on reporters and others who are closely tied to the ins and outs of Congress each day. A lot of controversy took place over the past few months after it became widely available that members of Congress were legally allowed to engage in insider trading. The theory was that because Congressional hearings are considered public then any information in such a hearing isn’t covered under the provisions by the Securities and Exchange Commission.

Republican House Majority Leader Eric Cantor is responsible for dropping a few of the provisions that were set forth in the Stop Trading on Congressional Knowledge Act. Many advocates of the bill assailed Cantor with accusations that he gave into the whims of bankers and large corporations on Wall Street. However, Cantor said such allegations were false. He said that his only concern was ensuring that they would avoid the possibility that they would create unnecessary impositions against people’s civil liberties.

A few other provisions in the bill also limited the type of information that Congress would have immediate access to. For example, lawmakers would be barred from having preferential access to information on new offerings and IPOs. The provision is named the Pelosi provision after the Senate leader. Pelosi’s husband had access to Congressional data and used it to engage in an IPO based on information that was not publicly available. However, Pelosi herself supported this provision.