Capital One fined over PPI sales
Capital One has been fined £175,000 by the Financial Services Authority (FSA) over payment protection insurance (PPI) sales failings.
The fine relates to 50,000 policies sold to customers between January 2005 and April 2006.
The FSA said the card provider had failed to provide full information to customers about policy exclusions.
PPI is a form of insurance that covers people in case they cannot pay loans as a result of illness or unemployment.
Capital One is the latest firm to be penalised for sales breaches. Last month, GE Capital bank was fined a record £610,000 for similar failings.
In response, Capital One said it accepted the fine and had amended its sales practices.
Failings
Capital One has some four million customers throughout the UK. It is one of the UK's biggest providers of credit cards.
The FSA investigation centred on the sale of 335,000 PPI policies relating to credit card debt.
Failings pointed out by the FSA included:
• Capital One failed to send a policy document to more than 50,000 PPI customers between January 2005 and April 2006
• Sales scripts did not ensure adequate disclosure of policy features and exclusions to customers
• Capital One's monitoring of sales calls was not sufficiently effective.
The card provider said it had taken what the FSA had to say on board.
"We consistently review our policies and practices and had made a number of significant improvements prior to the FSA's investigation," Sanjiv Yajnik, Capital One Europe chief executive said.
"The FSA has recognised that Capital One co-operated fully throughout the investigation," he added.
Investigation
The PPI industry is worth an estimated £5.5bn a year.
People who want to buy payment protection insurance (PPI) can now get advice from the website of the Financial Services Authority (FSA).
The watchdog has launched a set of tables to help consumers compare the policies on offer and their cost.
PPI insures people in case they cannot repay loans due to ill health or job loss, and has proved controversial.
This month the Competition Commission said insurers were overcharging their PPI customers by £1.4bn a year.
A spokesman for the FSA said that the tables were "a starting point to give customers basic information about what the polices offer and what they cost".
"PPI is almost always optional and consumers need to consider their own financial circumstances when deciding to purchase it and make sure they are clear about what will be covered," he added.
Complaints
The selling of PPI has been very controversial for several years, with critics such as Citizens Advice describing the industry as a "protection racket".
Insurers have been accused of selling polices that are too expensive and which may even fail to provide the cover they claim to offer.
The FSA has levied numerous fines on financial companies for mis-selling PPI policies.
And the Competition Commission even suggested that to protect customers it might impose temporary price limits and ban firms from selling PPI policies to customers at the point at which they take out a loan.
PPI still mis-sold, says Which?
BBC
Many people are still being misled into buying payment protection insurance (PPI) to cover their credit card payments, Which? claims.
A survey for the consumers' association suggests that nearly 10 million people have a PPI policy with their cards.
But 13% - 1.3 million - bought it under the mistaken belief it was compulsory or would improve their chances of having their card application approved.
Which? said people were wasting their money buying any form of PPI policy.
"Credit card PPI is a modern day snake oil - it's a useless product, expensive and poorly designed," said Doug Taylor of Which?
"In this time of economic uncertainty, people are effectively throwing away £970 million each year, when they should be encouraged to seek independent financial advice about protecting their finances as a whole," he added.
This was rejected by the British Bankers Association (BBA), who said the insurance was a valuable "plan B".
"Taking out PPI is not a condition for agreeing to provide the borrowing facility and people are free to shop around if they want to," a BBA spokesperson said.
"Last year, a mystery shopping exercise carried out by the FSA showed improvements in staff making it clear to customers that cover is optional and new rules which came into force in July tighten the PPI regime even further," the spokesperson added.
PPI is designed to ensure that people can still repay their loans, such as credit card payments or mortgages, if they fall ill or become unemployed.
Criticism
Consumer bodies such as Which? and Citizens Advice have long campaigned against the selling of PPI, describing it as little more than a protection racket run by the banks to boost their profits.
A typical scenario: your father is admitted to hospital, perhaps following a fall or a stroke at his home.
His doctor has said that he cannot return home because he would not be able to cope.
The nursing staff want his bed, and the local authority, after checking that your father owns his own home and therefore is "self-funding", gives you a list of care homes.
They imply that it is now up to you to find a care home for your father to move to, and quickly.
If your father lives in England, despite government guidelines and numerous cases in the courts and investigations, your father will still not necessarily receive the free care he is entitled to, unless a relative or friend knows the options available and has the confidence, and the time, to push for it.
'Self-funders'
So what should be happening in these circumstances?
Eligibility is not an objective test based on diagnosis, but an assessment of the needs of the patient
'Free personal care' for elderly
Q&A: Social care plans
The various parts of the United Kingdom have similar but not identical systems in place.
In England the local authority has a responsibility for the frail elderly, whether they are "self funders" - going to pay for care themselves - or not.
While you can assist if you wish to, it is not your responsibility.
So, the hospital should not discharge your father without:
• a multi-disciplinary assessment of his needs, including the observations not only of your father's doctors, but his immediate family or carers, occupational therapists, and any specialists dealing with his particular condition
Each year several million air passengers are the victims of overbooking, lengthy delays and sudden cancellation of flights. However, new rules which came into force from 17 February promise many air travellers compensation.
What's happening?
The new rules, originating from the European Union, will help millions of travellers worldwide who are left "stranded" at airports because of delays, cancellations or overbooking.
Will the rules only apply to EU residents?
No. Although the regulations have been created by the EU, you won't have to live within the EU to benefit.
Passengers travelling on all domestic and international flights taking off from any airport in the European Union, including French overseas territories, will be covered by the regulations.
If you are travelling from an EU airport, all airlines - whether European or not - are subject to the rules.
People flying into the European Union from overseas will also be covered by the new rules, as long as they are travelling on a European airline.
Are only scheduled flights covered?
It doesn't matter if you are flying no-frills, on a charter or scheduled service.
Flights originating from the EU, which have been sold as part of a package tour, will also be covered.
What happens if my flight is overbooked?
In an attempt to discourage airlines from overbooking, passengers can now get roughly double the existing compensation if they are bumped off a flight.
Compensation must be paid immediately.
These passengers must also be offered the choice of a refund, a flight back to their original point of departure, or an alternative flight to continue their journey.
If an aeroplane has been overbooked, passengers who have already been allocated seats can choose if they want to volunteer their seat in return for cash, negotiated with the airline.
If you volunteer you should also be offered the choice of a refund, a flight back to their original point of departure, or an alternative flight to continue your journey.
Passengers who are inconvenienced through overbooking may also have rights to meals, refreshments, hotel accommodation if necessary and, perhaps, even free e-mails, faxes or telephone calls.
What if my flight is cancelled?
You should be offered a refund of your ticket, along with a free flight back to your initial point of departure, when relevant. Or, alternative transport to your final destination.
You should also have rights to meals, refreshments, hotel accommodation if necessary and, perhaps, even free e-mails or telephone calls.
CANCELLATIONS
Airlines can only offer you a refund in the form of travel vouchers if you agree in writing
Refunds may also be paid in cash, by bank transfer or cheque
Boost for air passenger rights
If the reason for your flight's cancellation is "within the airline's control", it must pay compensation.
Compensation for cancellations must be paid within seven days.
View cancellation compensation rates
However, if the airline has given passengers at least two week's notice or has provided an alternative flight, close to the time of the original, it does not have to compensate those customers.
What if my flight is delayed?
When a flight is delayed, the airline may be obliged to supply meals and refreshments, along with accommodation if an overnight stay is required.
Whether you qualify will depend on the length of the flight and the delay.
For example, for flights of 1,500km or less where there is a delay of more than two hours, a passenger should be given meals and refreshments, along with two free telephone calls, e-mails, telexes or faxes.
If the delay is for five hours or more, passengers are also entitled to a refund of their ticket with a free flight back to your initial point of departure if this is relevant.
Any catches?
Yes.
Airlines won't have to pay compensation if the reason for delays or cancellations was due to "extraordinary circumstances".
LEGISLATION
Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91
Airlines are likely to argue that bad weather, strike action, or delays caused by air-traffic control or security alerts are outside their control.
Most airlines are not happy with the new rules and they have been seeking to challenge them in the courts.
They are also warning fares could rise as passengers will ultimately foot the bill for any additional costs incurred as a result of the regulations.
I'm a disabled traveller. Do I get any extra help?
Airlines must also "pay particular attention" to the needs of people with "reduced mobility" and anyone accompanying them.
What if I've got a cheap ticket?
If you bought your ticket through a frequent flyer programme or a discounted deal, you should still be covered by the new rules.
What if I'm upgraded or downgraded?
Airlines cannot charge extra if they need to upgrade passengers.
If someone is downgraded to economy, for example, because of an overbooking in business class, they must receive compensation within seven days proportionate to the type of ticket.
How will I know I have these new rights?
Airlines must ensure there is a clear notice about the new rights at check-ins.
And, if a passenger is denied boarding or a flight is cancelled, they must be given a written notice explaining the rules.
What if I'm on a package holiday, which originates outside the EU?
It's tough luck for the moment.
However, in 2007 the European Commission may be extending rights to passengers who fly into the EU on a European airline when the flight is part of a "package tour".
Who can I complain to?
Each EU member state has an enforcement body dealing with complaints that may arise from the rules. The full list is available on the European Commission's transport website (see link on top right).
British travellers can complain to The Air Transport Users' Council (AUC), which also has detailed guidance on its website (see link on top right) about the changes.
COMPENSATION: OVERBOOKING AND CANCELLATIONS
Length of journey Delay to destination Compensation
Up to 1,500km More than 2 hours 250 euros (£173.04)
1,500km to 3,500km Up to 3 hours 200 euros (£138.40)
1,500km to 3,500km More than 3 hours 400 euros (£276.83)
More than 3,500km More than 4 hours 600 euros (£415.26)
Source: Air Transport Users' Council
If you have your own web site or blog, I'd be extremely grateful if you could add a link to www.claimbankchargesback.co.uk - The more people using the site, the better it will become! Please tell your friends and family about us, and help them claim their own bank charges back.
Refunds over 'unfair' insurance
BBC
Mortgage lenders and insurers have agreed to refund £60m to customers whose premiums for mortgage payment protection insurance went up this year.
The refunds have been ordered by the Financial Services Authority (FSA).
The regulator is worried that premiums have been raised, and the level of cover limited, unfairly.
The payment protection insurance is supposed to pay people's mortgage repayments if they fall ill or are made redundant.
The industry had been accused of jacking up premiums, just when people were beginning to claim on their policies due to rising levels of unemployment.
"The FSA's concerns centred on the terms permitting these changes, and how clearly they were disclosed," the regulator said.
"[It] will put affected customers back in the position they were in before the policy was changed.
"It will also give all mortgage payment protection insurance customers clarity about when and why firms will be able to vary these in future," the FSA said.
Complaints
The move follows last month's decision by the FSA to order banks and other lenders to compensate customers who may have been mis-sold other types of payment protection insurance, especially the so-called "single-premium" variety that is often sold to people when they take out an unsecured personal loans.
The consumers' association Which? said the latest move would benefit about one million people.
"We're pleased that the FSA has taken action against firms who've effectively been selling people umbrellas, then trying to take them away at the first sign of rain," said Which? personal finance campaigner, Lucy Widenka.
"Customers must be refunded as quickly as possible, as many could be in financial difficulty as a result of their cover being reduced," she added.
Which? complained about the issue to the FSA in May.
The FSA's chairman, Lord Turner, raised criticism of the way policies had been changed when he spoke to the conference of the Association of British Insurers (ABI) in June.
Agreement
As well as paying back the increased premiums, dating back to the start of this year, the industry has agreed to:
• reinstate any cover that was reduced
• reinstate polices if a customer cancelled it within two months of the premium going up or the level of cover being cut
• freeze both premiums and the level of cover on offer for the rest of this year
• ensure all customers are told explicitly of when their contacts allow either the premiums or cover to be changed
The deal has been agreed with the ABI, the British Bankers Association, the Building Societies Association and the Council of Mortgage Lenders.
"The financial services industry has reached this agreement with the FSA to reassure customers, minimise market confusion, maintain confidence in mortgage payment protection insurance and ensure that people who have [the insurance] can maintain their cover, especially in these times of continuing economic uncertainty," they said.
The ABI's Director General, Stephen Haddrill, added:
"Mortgage payment protection insurance customers do not need to take any action, although it is important that they continue to pay their premiums to ensure that their cover continues."
"Their mortgage lender or insurer will contact them if their policy is affected in any way," he said.
If you have your own web site or blog, I'd be extremely grateful if you could add a link to www.claimbankchargesback.co.uk - The more people using the site, the better it will become! Please tell your friends and family about us, and help them claim their own bank charges back.
BBC May 2010
The Commission will publish its final verdict in July
Plans to restrict the sale of the controversial payment protection insurance (PPI) look set to go ahead.
The Competition Commission wants to ban PPI being sold at the time loans are granted.
It said customers would benefit from being given time to find more appropriate and better-value cover.
PPI is supposed to enable borrowers to pay off loans such as credit card bills or mortgages if they fall ill or lose their job.
The commission's decision is still provisional and open to final consultation - with a final verdict to be published in July.
'Overstating loss'
Plans to restrict PPI sales were first released in January last year.
“Start Quote
In these times of economic uncertainty, adequate financial protection is more important than ever”
End Quote Spokeswoman Barclays Bank
However, after an objection by Barclays, the Competition Appeal Tribunal asked the commission to review the plans - especially whether they would inconvenience customers who could not buy PPI at the same time as taking out a loan.
Its further study found that "many customers would place very significant value on being given the time and space to choose the right PPI product - or indeed to decide that PPI is not right for them", said commission deputy chairman, Peter Davis.
A "significant" number of customers appreciated the convenience of buying PPI at the point of sale of credit, he added.
"Overall we concluded that PPI providers are overstating the loss of convenience that would result from the introduction of a prohibition on selling PPI during the credit sale."
Under the commission's proposals, the ban would not apply to protection taken out on repayments for shopping through home catalogues, which makes up about 2.5% of the PPI market.
Barclays, whose complaint was supported by Lloyds Banking Group and Shop Direct Group Financial Services Ltd, said it was disappointed with the Commission's decision.
"We know that PPI is a product that is of value to many people. In these times of economic uncertainty, adequate financial protection is more important than ever," a Barclays spokeswoman said.
"We still maintain that to prohibit PPI being sold at the point of credit sale and for a fixed period afterwards will limit, rather than enhance, customer options and will result in customers being exposed as unprotected."
Action
Consumer organisations have complained for some years about people being mis-sold PPI polices.
Actions already taken by authorities include:
• In October last year, mortgage lenders and insurers agreed to refund £60m to customers whose premiums for mortgage payment protection insurance went up in 2009
• In September 2009, the Financial Services Authority (FSA) told banks and other lenders to compensate customers who may have been mis-sold payment protection insurance when selling "single-premium" PPI policies alongside unsecured personal loans
• At the same time, all financial firms were told to reopen 185,000 old complaints about PPI they had previously dismissed
• In May last year, the FSA told the banks, and other lenders who sell PPI, to immediately stop selling one version of the insurance, called single premium PPI, where the premiums are added onto the loan as an upfront lump sum.
The sale of PPI has been called a "protection racket" by consumer groups, as the policies can be very expensive and have been mis-sold to people who could never make a valid claim under the terms of their policies.
As part of its initial inquiries which led to the proposed ban, the Competition Commission found that in 2006, lenders made excess profits of £1.4bn when selling the insurance.
It found that the vast majority of the UK's 12 million PPI policies were sold at the same time as a consumer took out a loan, credit card or other type of credit.
Many consumers were unaware that they could buy PPI from other providers, rarely shopped around to compare prices and terms and conditions of PPI policies, and rarely switched PPI providers.
Peter Vicary-Smith, chief executive of the consumers' association Which?, said: "People need to protect their finances but PPI has been widely discredited because of its expense and the poor cover it offers.
"The industry should now concentrate its efforts on developing protection products that offer better cover and value for money to its customers."
If you have your own web site or blog, I'd be extremely grateful if you could add a link to www.claimbankchargesback.co.uk - The more people using the site, the better it will become! Please tell your friends and family about us, and help them claim their own bank charges back.
The Consumer Council has condemned the amount some banks charge for duplicate statements
The Consumer Council says bank charges of up to £10 a page for duplicate statements are "completely unjustified".
Details emerged after a caller to Radio Ulster's Nolan Show said that he had been charged £110 by First Trust Bank for an 11-page statement.
First Trust has defended the cost of the statement.
It said that customers were informed of the charge when they requested a duplicate.
The Consumer Council has released details of the amounts charged by other banks for duplicate statements.
The figures show a wide divergence.
The Bank of Ireland provides duplicates free of charge while the Northern Bank charges £6 per page requested.
The highest though is £10 per page charged by the First Trust - prompting the broadside from the Consumer Council.
"The Consumer Council is calling on the banks to play fair by their customers, especially during a time of recession," the Consumer Council's Alison Donnelly said.
DUPLICATE STATEMENT CHARGES
Abbey - £5 or £10 for multiple statements
Bank of Ireland - Free
Barclays - £5 per request
First Trust - £10 per page
Halifax - £5
Northern Bank - £6 per page
Ulster Bank - £10 per request
Nationwide - £5 for one statement, £10 for two or more
HSBC - Statements from less than one year ago - free. Older than one year £1 per statement with a maximum £10 fee
"They should be more open about what they charge for each of their services and at least make them clearer to customers before they are applied.
"However we believe charging their customers £10 per page for duplicate statements is excessive in the first place."
She also pointed out that customers could get the information in their statements using the Data Protection Act, which costs £10 per request.
The Consumer Council has condemned the amount some banks charge for duplicate statements
The Consumer Council says bank charges of up to £10 a page for duplicate statements are "completely unjustified".
Details emerged after a caller to Radio Ulster's Nolan Show said that he had been charged £110 by First Trust Bank for an 11-page statement.
First Trust has defended the cost of the statement.
It said that customers were informed of the charge when they requested a duplicate.
The Consumer Council has released details of the amounts charged by other banks for duplicate statements.
The figures show a wide divergence.
The Bank of Ireland provides duplicates free of charge while the Northern Bank charges £6 per page requested.
The highest though is £10 per page charged by the First Trust - prompting the broadside from the Consumer Council.
"The Consumer Council is calling on the banks to play fair by their customers, especially during a time of recession," the Consumer Council's Alison Donnelly said.
DUPLICATE STATEMENT CHARGES
Abbey - £5 or £10 for multiple statements
Bank of Ireland - Free
Barclays - £5 per request
First Trust - £10 per page
Halifax - £5
Northern Bank - £6 per page
Ulster Bank - £10 per request
Nationwide - £5 for one statement, £10 for two or more
HSBC - Statements from less than one year ago - free. Older than one year £1 per statement with a maximum £10 fee
"They should be more open about what they charge for each of their services and at least make them clearer to customers before they are applied.
"However we believe charging their customers £10 per page for duplicate statements is excessive in the first place."
She also pointed out that customers could get the information in their statements using the Data Protection Act, which costs £10 per request.
Banks will not have to deal with new complaints about unauthorised bank charges for another six months.
The Financial Services Authority (FSA) has extended the "waiver" on complaints about excessive overdraft charges because a test case is still going on.
The extension means the period of grace for banks will now end in January 2010.
Law Lords will rule on the latest stage of the test case in the autumn, but the legal battle is expected to continue for some time.
'Progress'
"Although the test case is progressing well, we still do not have certainty on this complex issue," said Dan Waters, director of retail policy and conduct risk at the FSA.
Our objective continues to be facilitating a fair and consistent resolution of consumer complaints about unauthorised overdraft charges."
This is the third time that the original waiver, first granted in the summer of 2007, has been extended.
All new claims against banks were effectively suspended in July 2007 when the Office of Fair Trading (OFT) and seven banks, along with the Nationwide building society, agreed to stage a test case to see if their controversial overdraft charges were legal or not.
Following a three-day appeal in the House of Lords in June, all parties are now waiting for their decision on whether to uphold the right of the OFT to regulate bank charges
