Claims Review - Personal & Financial Claims

Banks face £4 Billion pound bill for PPI Mis-selling.

2010-08-02T02:25:00.001-07:00

Banks may be forced to pay back £4bn in mis-sold insurance scam Banks and insurance companies may have to pay a staggering £4bn to customers who were taken in by a 'loan protection racket', it has emerged.

City watchdogs have published their first estimates on the scale of repayments due to people sold payment protection insurance (PPI) alongside personal loans, mortgages, credit and store cards.

Vast numbers of the expensive policies were sold to customers without proper checks on whether the policies were suitable.

The PPI was sold to consumers on the basis it would provide a safety net to cover loan repayments in the case of sudden unemployment or sickness.

However, commission-hungry salesmen sold PPI to people who would never be able to make a claim, including pensioners, those in seasonal work and people with long-standing medical conditions.

The Financial Services Authority (FSA) said paying refunds and compensation to customers who have not yet complained could generate a bill of £1bn-£3bn. It suggests there will be another £700m to £1.2bn over five years for customers who have already complained.

The FSA estimates that insurance brokers may have to pay up to £430m with the rest paid for by a varying range of PPI providers, led by banks and insurance companies.

The watchdog estimates that average redress for people who bought single premium policies is £1,925. It is a lower £990 on average for people who bought the policies via monthly premiums.

The FSA has previously fined a number of household name banks and insurance groups for mis-selling PPI.

First published in the Daily Mail

Lloyds TSB scraps PPI sales

2010-07-27T04:59:00.001-07:00

Years of payment protection insurance (PPI) mis-selling could be nearing an end after Lloyds Banking Group threw in the towel in the fight to keep the controversial product

Lloyds today confirmed that it has withdrawn PPI policies from sale across all its brands, which include Halifax, Bank of Scotland and Cheltenham & Gloucester.

PPI insurance is designed to cover loan repayments in the event of unemployment or loss of income. It can also come under the title of income protection insurance. It has been criticised for being useless for many policyholders who would never be able to claim, as well as for being costly and a huge money-spinner for the banks.

Experts hope it will mark a turning point in battle to rid the High Street of PPI, with more banks expected to follow suit.

Lloyds' – like many other banks - offered PPI to its mortgage, credit card, and loan customers.

Now the taxpayer-owned bank will only offer interested customers a generic PPI leaflet produced by the British Bankers' Association.

Existing customers who have taken out PPI policies, or are in the process of doing so, will not be unaffected.

Reclaim PPI which has been mis-sold by Lloyds TSB

Mortgage firm to pay £500,000 for unfair fees

2010-07-26T04:58:00.001-07:00

A sub-prime mortgage company has been hit with a whopping £630,000 fine by the City watchdog for treating customers in arrears unfairly.

Redstone Mortgages Limited overcharged customers a combined £500,000 in arrears fees between January 2007 and August 2009 and must pay that sum in addition to the fine.

The Financial Services Authority (FSA), which issued the punishment, says borrowers hit with excessive arrears charges will be contacted by the firm to offer compensation.

Redstone also demanded cash to cut customers' arrears without considering their financial state and wrote "repetitive, excessive and confusing" letters.

Redstone, which is not a lender, bought large swathes of mortgages from specialist lenders that mainly sold loans to those with poor credit histories or homeowners who could not prove their income.

Those whose loans were bought, now owe Redstone the money, not their original lender.

Redstone compensation

The regulator has identified four types of excessive charges. Redstone is currently sifting through customer records to determine who has been overcharged. When that process is complete, it will write to customers offering redress, though the FSA warns that could take months.

The unfair fees were:

Charging for failed direct debits each time it attempted to take payment, even when this happened multiple times within a short time.
Including arrears charges in the balance on which an early repayment charge (ERC, which is a percentage of the outstanding balance) was calculated.
Charging for debt counsellor visits when the customer was not given an appointment time or was not told of their right to cancel.
A solicitor's fee, applied when Redstone unnecessarily instructed lawyers.

The FSA, which does not have a breakdown of the average amount charged to individual borrowers, says homeowners will know if they're a Redstone customer if the name appears on their mortgage statement.

More on this story http://www.moneysavingexpert.com/news/mortgages/2010/07/mortgage-firm-to-pay-500000-redress-in-unfair-arrears-charges

You could be able to claim compensation for a mis-sold mortgage click here for more details.