Record Number of Critical Illness Claims Rejected

One in ten critical illness claims, made by those suffering from a serious illness are turned down, according to a report by Money Mail. Their research suggests that the percentage of these claims being rejected by life insurance providers is at it’s highest level since 2007.

Insurers have been thoroughly probed regarding the matter, initially winning the battle against declined critical illness claims. However, the number crept up again to the tune of almost £80 million worth of claims… with many now turning to the Financial Ombudsman Service for help.

One case involves a 43-year-old woman, who was diagnosed with breast cancer; She had been turned down by her insurance provider because of some undisclosed medical condition.

Another case, involves mother of two, Caroline Quirk, who was found to be with cervical cancer who was also dismissed by her insurance provider, Scottish Provident, after not reaching the minimum month of giving up smoking – which is clearly an honest mistake.

Quirk was not reimbursed of the amount owed to her, but was given a meager £3,160 instead. After her claim, Scottish Provident terminated her policy.

The House of Lords is now raising a bill that would require insurance firms to specifically ask about any medical condition that would prevent policy holders from getting hold of their cover. They would also be obliged to pay a share of the claim if the holder made an honest mistake.

Other insurance firms like Royal London, Legal & General, and Aviva had been reported to have raised their dismissed claims, doubling last year’s number.

Meanwhile, the Association of British Insurers (ABI) has started a “non-disclosure” code that guarantees policy holders of the claim when they make an honest mistake.

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Reasons For Ring Fencing Banks

Ring fencing is a term to describe the situation where a firm makes part of its business a separate entity to the rest of its business. The purpose or ring-fencing an aspect of your business is so that losses in one area can’t affect another.

Ring Fencing Banks

The recent Independent Commission on Banking (ICB) wants UK commercial banks to ringfence their retail division from their riskier investment banking divisions.

This involves making the retail and investment arms of a bank separate legal entities.

Reason for Ring Fencing Banks

When banks lost money on buying sub-prime loans and credit default swaps, this placed retail deposits at risk. Losses on other aspects of business put ordinary deposits at risk. The government wants to guarantee all retail deposits to retain confidence in the banking system, but this meant they were intervening in banks to pay for risky investment losses. By ring fencing retail parts of banks, the government hope:

  • It will be less likely they have to bail out banks. Retail operation of banks less risky than investment branches which dabbled with a wide variety of financial derivatives.
  • If they do, it will cost less.
  • Currently, there is motive of moral hazard for banks. If they take risks (e.g investing in sub-prime loans) but fail they can rely on bailout from the taxpayer. This new system would allow investment banking divisions to fail, therefore they have incentives to avoid taking risks.

Potential Problems of Ring Fencing Banks

Some argue that ring-fencing banks could increase the cost of borrowing for firms. This is because they can’t use other profitable areas to finance lending. However, this is disputed by others

Example of Ring Fencing

Portland General Electric was acquired by Enron in 1997. However as part of the deal, the company was ring-fenced by the state of Oregon. When Enron declared bankruptcy amidst shady accounting, the state electric company’s assets were protected from Enron’s creditors. If it hadn’t been ringfenced the Portland electric company could have also been wound up to pay off Enron’s creditors.

Source: Economics Help

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Only Three British Banks Make It On To The 50 Safest List

German, French, Dutch and Swiss banks dominate the list of the world’s 50 safest banks. They are followed by Australian, Canadian, Spanish, Swedish, Italian, US, and Chinese banks, along with institutions from UAE, Kuwait and Japan.

Only three British banks were able to make it to the category, and that includes HSBC, at 16th, Nationwide at 41st, and Barclays at 49th. Other British banks were not featured.

Santander, which has a big UK presence, landed 10th, followed by National Australia Bank, proprietor of Clydesdale and Yorkshire Bank UK, coming at 12th.

German bank, KfW topped the list, followed by French public sector bank, Caisse des Depots et Consignations (CDC) and Dutch Bank Nederlandse gemeenten, coming in at 3rd. Luxembourg’s Banque et Caisse d’Epargne de l’Etat landed on 8th place.

HSBC is strong enough to withstand economic crisis, evident in retaining its fourth spot in the world’s most profitable banks. This is mainly due to its strong business with booming Asian countries like India and China.

Nationwide Building Society, on the other hand, prides itself of having a “dependable business strategy” that allows it to be successful, reliable, safe, and secure, as well as

Provide their customers the confidence that “they will continue to be there for them throughout the challenging economic climate.”

Their solid business strategy also enabled them to move up from its 46th position last year to 41st.

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Banks Continue To Use Delaying Tactics To Put People Off PPI Claims

With all the negative press that the banks are receiving for the mis selling scandals – mis sold emdowments, mis sold PPI, mis sold mortgages, mis sold interest swaps, and mis sold investments (i’m sure this list will continue to grow)…. you’d think that they would be on their best behaviour when trying to resolve complaints.

Well… that was wishful thinking…

After failing in their bid to avoid repaying customers who were mis sold payment protection insurance, they collectively set aside £billions and agreed deadlines with the FSA for settling PPI claims.

But… they’re continuing to make it as difficult as possible for borrowers to get their money back by rejecting the PPI complaints and forcing borrowers to pursue their PPI claims via the Financial Ombudsman Services… who are already struggling to deal with the ridiculously large volume of PPI compensation claims.

Senior Claims Manager at PPI Refunds UK, Rick Power, has expressed his frustration at the banks “… we ask the banks to provide us with a copy of the original credit agreements and all statement relating to our clients account… we then use this information to calculate the total refund… however, many of the banks, are now writing to us to informing us that they have never received a Letter of Authority (LOA) from the client, or the signatures on the LOA do not match their records, or some other nonsense reason… only to contact our clients directly and make a partial settlement offer that is less than half of the value of the actual refund… it’s ridiculous, the FSA needs to review how the banks are dealing with PPI claims.”

The banks have already missed their deadline for settling PPI complaints that were placed on hold pending the outcome of the PPI Judicial Review without punishment and are now flouting the rules once more to see how much they can get away with before they are reprimanded… similar to a child stealing from the cookie jar!

Remember… these are the same banks that went to court saying “We know we made £billions from mis selling PPI… we just don’t want to pay it back”… and they are used to doing as they please while the FSA watches on. This is becoming a game of wits… where the banks are trying their best to get away with having to repay the money they say they have set aside for their customers…

Our advice is to tread carefully… do not accept a settlement offer unless you are absolutely certain that it includes the PPI premium charged, plus any interest paid, plus 8% interest per annum.

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FSA To Probe Sale Of Packaged Current Accounts

It seems that banks can’t do right for doing wrong at the moment, as the Financial Services Authority (FSA) is set to start an investigation on how fee-paying current accounts are being sold.  The results of which, could change the way customers are encouraged to accept the so-called “packaged accounts” which values at £300 a year.

Industry insiders reveal the city regulator’s alarm over how the sales practices are so similar to those used in the mis selling of payment protection insurance (PPI).

During February, the city watchdog told several banks to reimburse their customers of the accounts that were bundled, often overpriced and unnecessary.

Similarly, they are sold through the same technique used by commission-driven IFAs; pressuring the customer, while luring them with an overstatement of benefit, and hiding all the important details necessary to claim their right to their insurance.

The fees on their accounts give access to a variety of covers not offered by free accounts, from identity theft, to travel, to car break down insurance.

The regulator warns consumers these accounts don’t often centralize on the perceived benefits. There are always exclusions written in fine print. To give an example, one may buy travel insurance, but one cannot claim it because of some pre-existing health conditions that disqualify them to take it in the first place.

Clearly, banks have profited from their money-spinners. With more than double its number in the last five years, these fees charge between £5 and £25 a month, and consumers waste £240million or £320 million a year, to unused coverage.

The regulator stressed, that banks should make clear about the standards on these bundled accounts.

The FSA is asking the public, banks, and consumer groups of their experiences on the selling of these accounts. The data will be published later in the year… it seems like the net is starting to unravel as more and more mis sold products and services are being highlighted and the banks are coming under increasing pressure to repay customers.

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What Is VAT?


VAT (value added tax) is similar to a sales tax. It is a tax that is charged on most goods and services provided by VAT registered business in the UK. It is also charged on some goods and services imported from countries outside the EU and brought into the UK from other EU countries.

UK VAT is charged when a company registered for UK VAT sells to either another business or a non-business customer. This is called output tax.

When a UK VAT registered, business buys goods and services they can generally reclaim the VAT (input vat) they have paid on those services. An individual or non-VAT registered business cannot do this.


Do you need to be VAT registered?
If your turnover is more than £73,000 then registration is obligatory. A business may however choose to register for UK VAT even if turnover does not reach the threshold.

As part of our setup package, we register our clients for UK VAT if required. Most international clients will want to be UK VAT registered even if they never reach the obligatory threshold in order to be able to reclaim back the VAT on their expenses.


How much is UK VAT?
There are three rates of UK VAT

  • Standard – currently 20%. This rate applies to most goods and services
  • Reduced – 5% this rate is charged on fuel and power for instance
  • Zero – for example on books and magazines

Some goods and services are

  • Exempt from UK VAT
  • Outside the UK VAT system
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BBA Warns Ring-Fencing Banks Could Choke Britain’s Economy

The British Bankers’ Association (BBA) warns against pursuing ring-fencing amid the eurozone debt crises. It says the reforms could choke Britain’s economy and hamper the flow of credit to companies. The Lobby group suggested to concentrate instead, on boosting business lending and investment banking.

BBA’s chief executive, Angela Knight said: “If more regulation remains at the top of the list then this will only have the effect of risking the recovery.”

The Confederation of British Industry (CBI) reiterated Ms. Knight, and added that it would be reckless to press ahead with plans to separate the investment from the retail banking arm.

The business lobby group’s director, John Cridland, stated in the Financial Times, “Taking action at this moment – this moment of growth peril, which weakens the ability of banks in Britain to provide the finance that businesses need to grow – is just to me barking mad”

Mr. Cridland added, “We don’t want to force some of our remaining world class British companies to shift away from a focus on the UK because the rules have been set unilaterally in the UK. There’s an own goal here about to be scored if we get this wrong… I get a sense that there’s a little bit of ‘we’ll do this because of political reasons…”

The Independent Commission on Banking (ICB) is expected to support ring-fencing, as it is scheduled to release its recommendations on the twelfth of September. However, the decision to implement banking reforms will be entirely up to the Chancellor, George Osborne.

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