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!

 

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Are Credit Cards Right For You?

Credit Card Debt

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.

Credit Card Debt

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.

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