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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.

PPI sale ban set for go-ahead

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."

Telegraph
An investigation found customers were effectively charged interest rates of more than 150 per cent on unauthorised overdrafts once fees and penalties were included.
And despite advertising rates of around 19 per cent, high streets banks are charging on average an annual rate of 32 per cent for an authorised overdraft on some accounts, the research found.
Mr Cable accused banks of a lack of transparency and called for a more competitive banking sector.
He said: “Consumers have been ripped off, get a very bad deal, are affected very much by the complexity of a lot of financial transactions that are not transparent.
“When we talk about restructuring the banks, what’s going to come out of this is a more competitive system where the customers are not ripped off.
“One of the negative side effects of this [financial] crisis is that our banking system, that was already very concentrated, is now even more concentrated so there’s less competition, less choice and a bigger temptation for banks to earn margins at the expense of their customers.”
The fees charged by Barclays for an unauthorised overdraft of £500 are equivalent to a 220 per cent annual interest rate while Bank of Scotland’s are equivalent to 365 per cent, the study for BBC’s Panorama showed. Bank of Scotland’s parent company Lloyds Group received £20 billion in the Government’s bailout of the industry.
By comparison, high street rivals Lloyds and NatWest both charge the equivalent annual rate of 19 per cent, according to the research.
The average rate across the high street worked out at 167 per cent over a year.
In the programme Mr Cable also attacks the morality of the City over its continued payment of bonuses.
“I think the bonus culture which continues is unacceptable. The coalition agreement makes it very clear that unacceptable bonuses are continuing and that is something we want to try to stop and that reflects the lack of moral compass.”
The research on overdraft rates was carried out by SG Hambros, the financial advisers.
Christine Ross, Group Head of Financial Planning, warned consumers to “really scrutinise” the small print on overdrafts.
“Because it’s not just the main headline rate that counts but all the other fees that are added in, fees that people possibly wouldn’t think about.”
Explaining her research she added, “We took an average of many high street banks and we came up with 32 per cent for an authorised overdraft of five hundred pounds. Now if it’s unauthorised…again five hundred pounds, on an annual basis, that would equate to a 167 per cent.”
A spokeswoman for the British Bankers’ Association denied that consumers were being ripped off and said overdrafts were “not designed for long term borrowing.”
“Overdrafts are a service to customers needing occasional, short term help with cash flow.
“Anyone who finds themselves in the position of needing regular overdraft facilities, or where the borrowing is going on over many months, should seek help from their bank with budget planning or advice on what type of loan would best suit their circumstances.
“Banks have no desire to hide the cost of borrowing from their customers. Information is clearly set out on bank websites, displayed in branches and sent to customers with their statements.”
• 'Panorama: How To Beat The Banks' is broadcast at 8.30pm on Monday July 19.

Guardian
Customers are being charged an average of 167% a year on unauthorised overdrafts, once fees and penalties are taken into account, according to a report from SG Hambros. The additional charges people face when they go overdrawn can include a fee for using their overdraft, a charge for direct debits which are honoured (even though there is insufficient money in the account) and a fee for any payments that bounce.
Research carried out for last night's Panorama programme on BBC One found that the fees charged are far higher than the rates advertised. High streets banks charge, on average, an annual rate of 32% for an authorised overdraft on some accounts despite advertising rates of around 19%.
Barclays Bank's fees for an unauthorised overdraft are equivalent to a 220% annual interest rate, while Bank of Scotland's daily fees for those with an unauthorised overdraft took their interest rate to 365%.
Christine Ross, SG Hambros group head of financial planning, told the BBC: "What we found is that unless individuals really scrutinise the small print, the overdraft rates charged are far higher than they could even imagine. Because it's not just the main headline rate that counts but all the other fees that are added in, fees that people possibly wouldn't think about."
Business Secretary Vince Cable accused the high street banks of "ripping off" their customers and failing to be transparent over the fees they levied. He told Panorama that consumers were losing out because of a lack of competition in a marketplace dominated by a small number of big banks. "Consumers have been ripped off, get a very bad deal, are affected very much by the complexity of a lot of financial transactions that are not transparent," Cable said.
But the British Bankers' Association defended the charges, pointing out that because overdrafts were designed to be used for only a few days, it was impossible to calculate accurate annual lending rates. A statement said: "Anyone who finds themselves in the position of needing regular overdraft facilities, or where the borrowing is going on over many months, should seek help from their bank with budget planning or advice on what type of loan would best suit their circumstances."
At the end of this month, banks are due to begin publishing illustrative scenarios on their websites showing unarranged overdraft charges, giving consumers an idea of the costs for different patterns of use. The case study-type scenarios are part of the deal struck with the Office of Fair Trading in October last year to make personal current account costs more transparent and the switching process more reliable and trusted.
In a statement, the BBA said banks have no desire to hide the cost of borrowing from their customers: "Information is clearly set out on bank websites, displayed in branches and sent to customers with their statements."
Yet under some scenarios the rate of interest and charges can reach four figures when it is calculated on an annual basis. Halifax, owned by the part-nationalised Lloyds Banking Group, charges customers who go overdrawn a flat fee of £1 a day. As a result, if a customer had an overdraft of £10 they would pay the equivalent of 3,650% in annual interest and charges.

Credit Card Charges Claims
The Bank charges defeat by the Office of fair trading certainly took the wind out of our sails but I really want to emphasize to you something very important.
THIS DOES NOT EFFECT RECLAIMING CREDIT CARD CHARGES
There are about 160 million credit cards in the UK, (visa, mastercard etc), and the average person has 2-3 right now and that does not include the cards going back 6 years.
Every time you have exceeded your limit or paid late you will have been charged by teh credit provider and it is often an illegal amount. We can claim back all these charges for you without any upfront fees. The average claim is £544 per card.
Claim now using the form to the right.

Money savings expert , Martin Lewis, bank charges and Financial hardship
We all love Martin.....

But, he is advocating claims for financial harship. It goes like this...we lost teh bank charges case (i.e the consumers), but if you are in debt, unable to make ends meet, and are deemed in financial hardship then the banks are obliged to look into your case and help you.

This would be wonderful only I have heard that it is so unusual as to almost be a waste of time. I spoke with Claims Financial and of their 4800 financial hardship claims only a handful resulted in ‘goodwill’ payments despite endless form filling etc.

I do however encourage you to claim back all your credit card charges going back 6 years. You probably have 3 credit cards right now and the average claim is about £550 per card.

Also, please check your loans, credit cards, mortgages and finance agreements for this infamous PPI....which has been sold about 20 million times in the Uk and the average refund due is £2000. You cannot reclaim it unless you know you have it so please check!!! You can reclaim here.