£113,300 fine slapped against Co-op for delaying PPI claims

January 8th, 2013 No comments

The FSA (Financial Services Authority) has fined the Co-op bank for a sum of £113,300 for failing to settle growing PPI complaints.

By putting 1,629 PPI complaints on the back burner in 2011, while disputing the Financial Services Authority’s new rules at the High Court, the Co-op bank has earned itself public wrath and a fat fine.

Writing to the Building Societies Association and the British Bankers’ Association in the first month of 2011, the FSA stated: “We will take tough action against any firm which cannot demonstrate it is delivering fair outcomes for consumers, including because the firm is inappropriately relying on [part of the FSA's complaints rules] to defer consideration of those PPI complaints that could and should be progressed during the judicial review.”

The FSA’s strict action comes as a relief to thousands of PPI victims, several of whom have been waiting anxiously for justice over the past few years.

Receiving flak for practices that many have found to be misleading and unethical, the Co-op bank is just one among many others to have duped the public into applying for PPI loans. Several other banks in the United Kingdom are expected to be similarly disciplined. With public anger rising to a boiling point, banks have already set aside £12bn to settle the colossal bill.

Speaking on the issue, FSA’s Enforcement and Financial Crime Director Tracey McDermott stated: “While nobody suffered any financial loss, Co-op’s actions meant that a significant number of people had the resolution of their valid complaints delayed for no good reason,”

Admitting to the mistakes it had committed, a Co-op spokeswoman had this to say – “In this instance, our procedures have fallen short of the high standards rightly expected of us,”

“We have co-operated with the FSA throughout their investigation and we are confident that this would not occur again if similar circumstances were to arise,” she concluded.

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The BBA’s Taskforce watches the merits of Banking Standards Board

October 15th, 2012 No comments

The new chief executive of the BBA (British Banker’s Association), Anthony Browne, says a high-level unit organised to inspect whether the formation of the Banking Standards Board is able to bring back the confidence and belief in bankers following the Libor’s scandal and mis-sold PPI’s event that the industry committed.

The ethics have already been investigated by the board set up by MP Andrew Tryie. Many major banks wish to emerge from the scandal and endeavour to mend their battered reputation.

The head of the BBA, Anthony Browne says a taskforce is established to watch Banking standards merits, this was an idea brought forward by Barclays in Tyrie’s board.

Browne says their taskforce is looking to take an active part in the standards after the discussions about initiating a banking standard committee to support certain ethical standards.

He also said that a few people who are operating in the city require being authorised by the FSA (Financial Service Authority); this approval could penalise and sometimes could ban individuals. The primary idea behind establishing a committee is to support ethical standards and to be self-contained.

The result revealed by polling data demonstrates that the population represented by an overwhelming majority are cynical towards the credibility and trustworthiness regarding banks. Browne says when trust is lost expeditiously, it takes a little longer to get back to the normal state.

In the discussions he said the measures by the standard board are in the development stage and they are trying to facilitate these discussions and measures.

The Treasury select board appears before Tyrie’s committee on Thursday towards to discuss necessities that are to be handed over to the Financial Policy Committee from the Bank of England. The meeting held can be ensured to protect financial stability. Browne wanted to express how this firm had alternated in past 4 years; this industry could save its economy from collapsing.

He added the mis-selling scandal of PPI, coordinated by BBA with FSA (Financial Service Authority) was a disaster.

Brown said presently major banks and firms were operating in the favour of their customers, which gave up his function since the latest Libor scandal has removed coverings of any entanglement in setting Libor rates.

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U.K authority reveals plans and recommendation for Libor overhaul

October 3rd, 2012 No comments

Libor has been recognised as the centre for global scandal. It sets interest rates for loans around the world. A top British official has been assigned to overhaul Libor (London interbank offered rate) and eliminate it from the management of financial firms and banking groups, enabling U.K. authorities to focus on penalising wrongdoers.

A top regulator at the U.K’s FSA (Financial Service Authority), Martin Wheatley, has been allocated by the British government to overhaul Libor. He planned to reveal his recommendations this Friday morning.

Most banks that try to manipulate interest rates for their commercial profits are under investigation, a Libor is a daily estimated rate which guides banks on how much interest would be charged in the London wholesale interbank market.

Mr. Wheatley launched an inspection which penalised Barclay Bank with a settlement of around £290 million under the rate rigging scandal in the U.K.

In his plan he recommended the FSA should be given power to manage Libor and inflict criminal and civil penalties on wrongdoers; however it requires the support of the British government. Other recommendations of his plan are likely to be implemented quickly.

The BBA (British Banker’s association), was made aware a few days back that the FSA authority was likely to remove them from controlling Libor.

The private organisation representing around 200 banks along with U.K operations showed their endorsement towards Mr. Wheatley’s recommendation.

In an interview Mr. Wheatley said he is aware of commercial providers including multiple organisations that are possibly interested in capturing control of Libor. For example Thomson Reuters Corp, collects Libor financial data from multiple banks and complies with the BBA. Meanwhile Bloomberg LP’s executive expressed his interest in supplying financial measures very similar to Libor.

Mr. Wheatley also said in his interview that the “decision of transferring Libor to its new owner will be primarily compelled by investigating and finding one who is capable of bringing believability and integrity back into the system.”

He is calling for an expansion for the number of banks to surrender Libor reference rates data and their borrowing costs. British and U.S. regulators set investigations into Libor’s scandal act which has been brewing for years. British and USA authorities were shocked at how much the system has been misused and are pursuing at least another 15 banks thought to have been involved in the scandal.

Mr Wheatley has proposed a 10 point plan. The goal of this plan is to eliminate the temptation of small groups and individual banks to minimise the interest costs.

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PPI issue demand attentions of banks and other financial firms

September 24th, 2012 No comments

Charter UK, the chief executive of complaints management Software providers, have said that there has been a relentless increase in Payment Protection Insurance (PPI) complaints recently. This will occupy the financial services institutions, banks and other organisations for at least next three years.

Considering the latest figures revealed by Financial Ombudsman Service (FOS), the PPI complaints rose by 42% in the first half of 2012. The FOS said around 1500 new issues and complaints were arising every day.

Lloyds banking group have received the most customer complaints and Barclays was next in line.

Lloyds has set a figure of £4.3 billion as compensation towards the mis-selling of PPI, which is far more than any of the other banks. Anthony Jenkins, new chief executive of Barclays, said that resolving their customer complaints is top priority and has put £1.3 billion towards the compensation budget.

Banks and other financial institutions should realise the fact that PPI is not considered as a short-term problem anymore, it may raise issues in the future and could absorb into existing businesses and systems. They should ensure that the mis-selling PPI issue will demand their attention for at least the next three years.

From all the figures shown, it is clear that the FSA has underestimated the total amount that banks and other financial firms need to pay towards PPI remediation. Mr Clark has said that “some banks have worked to centralise their systems and process while others have not”. Repaying the mis-sold PPI should be a priority for any firm or bank that desires to decrease their risk and cut their costs.

The principal for Cumbria-based Eden Financial Planning, Julie Bayley, said that most banks were still responsible for receiving the majority of FOS complaints, especially in relation to mis-sold PPI. “It’s just a shame that we all get tarred with the same brush as the banks in business full stop.”

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PPI complaints doubled and still continue to increase

September 20th, 2012 No comments

The FOS (Financial Ombudsman Service) received PPI complaints which are 27% more than the previous six months, it received 135,170 new complaints among them 63% were about mis-sold PPI.

When compared to any other types of complaints, the PPI complaint has got a significantly higher rate of success, which is around 71% in the favour of the customer. FOS noticed complaints mainly on major banks and credit card firms on the previous six months.

Of the complaints that were dealt with, the highest complaints are ranging from 90 % to 98 %, which were against Lloyds (98%), MBNA (97%), CitiFinancial (93%), Barclays (93%), Welcome Financial (92%), HFC (90%), Bank of Scotland (90%) and NatWest (89%).

The FOS accepts complaints from the customers where financial services and firms fail to settle the agreement with their customers. In the beginning banks, financial firms, even the FOS itself were deluged with counterfeit complaints submitted by claims management companies (CMCs) on behalf of customers.

The chief executive and chief ombudsman Natalie Ceeney, said that the number of complaints on PPI were doubled in the beginning of 2012 and it is continuing to increase each day. Of the new complaints received by them most are coming directly from the customers.

PPI is a policy considered by many people to cover their repayment in case of job lost or illness, but this was sold wrongly by banking industries and credit card companies alongside mortgages, credit cards and other loans.

According to new rules set by the Financial Service Authority (FSA), all past PPI policies sold should be reviewed again to reveal mis-sold PPI’s, but the banking industry which is in the high court is contesting these new rules.
11 banks and few credit card companies have set about £10bn as compensation to be paid, as an effect of compensating and administrating bill process. Marc Gander, member of Consumer Action Group commented that as per FOS figures there are still some banks not treating their customers fairly.

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Major Banks Scored Below Average in Which? Customer’s Service Test

September 18th, 2012 No comments

Most of the UK’s major banks scored below average in Which? Customers service review. The overall score is built upon respective customer ratings in a particular field. Upon its customer service test it revealed that most major banks failed to exceed the average score of 62%.

Santander and Halifax scored the lowest– 46% and 48%, respectively. In its customer review test “First Direct” occupied first place with an overall score of 86%, followed by “The One Account” which finished in second with a score of 80%.

Which? revealed that about 14 banks scored below the average score, they are: Bank of Scotland (49%),, Royal Bank of Scotland (50%), Northern Rock (51%), Lloyds TSB (51%), Barclays (54%), Natwest (56%), Clydesdale banking (57%), Cahoot (59%), Virgin Money (60%), Post Office (60%), Cheltenham & Gloucester (60%), AA (60%), HSBC (60%), Sainsbury’s Finance (61%), Yorkshire Bank (61%).

The First Direct scored 90% in the field of mortgages and ING finished second with a score of 88% from its mortgage customers, while The One Account and Co-Operative bank both scored 83%.

Santander received the least customer satisfaction score of 41% in the field of mortgages; the next lowest scores were received by Halifax and Bank of Scotland both scoring 47%, where mortgage customers were unsatisfied for their poor customer services.

Richard Lloyd, executive director of Which? , says that “consumers are not satisfied with the customer service provided by most banks and they are constantly being let down”.

This survey gave the below average banks a reality check; they have now realised the importance of their services they provide to their customers and have gone the extra mile to make their customers happy. They are now rated higher when compared to the banks which offer better interest rates and products.

All banks should change their fundamental values in regard to banking and should focus on providing better customer service. They must provide services which benefits their customers, not the bankers.

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Libor’s impact on RBS

September 13th, 2012 No comments

The UK RBS branch is facing a hefty fine due to the Libor scandal, probably within the £200million to £300million mark. This is after they reached settlements with the UK’s FSA (Financial Service Authority) because of accusations made by some of its employees in regard to the global Libor rigging scandal.

The Financial Times stated that RBS has been confronted with a similar compensation figure to Barclays, which came to an agreement of £290million; over its attempt to manipulate the London interbank rate. Press agencies have reported that RBS are anticipating a similar settlement to be agreed upon as the one made with Barclays Plc and for proceedings to take place with a couple of months

Reuters are expecting the FSA to settle the RBS issue first, before starting on separate agreements in the U.S. This agreement with between all the authorities and regulators could result in a massive blow to RBS.
RBS has dismissed four of its employees in relation to the rigging scandal, and said that it could not elucidate on when an agreement could is to be finalised and at what level of fines will be imposed. FSA has declined to state its opinion.

Reuters reported that RBS had played a vital role in the manipulation of Libor or interbank rate and other similar rates. Stephen Hester, Chief Executive of RBS, said that bank was prepared to “Stand up and take any punishment” that may arise over the issue.

More than 10 banks are suspected to have played a part in the Libor rigging scandal and are under investigation by U.S, Asia and Europe regulators. Due to this, shares in RBS have closed down, which brought about a huge loss to the UK taxpayer; approximately £24billion. Bailing the bank out resulted in the total cost of £45billion in 2008.

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FSA on the lookout for mis-sold PPI’s

September 10th, 2012 No comments

The FSA are carrying out a serious investigation after it was revealed that Barclays were found to be making a higher gross profit; about 10% of its global profits were made through Payment protection insurance (PPI) sales. Also, the FSA announced that Barclays have charged their customers disguised insurance costs, as a result most claimants expressed their discomfort, saying that have been rejected to qualify for a payout.

Martin Wheatley, managing director of FSA (Financial Services Authority), on a conference call made a statement saying, “What we found is not pretty. Most of the incentive schemes we looked at were likely to drive people to mis-sell in order to meet targets and receive a bonus, and these risks were not being properly managed.”

“I want to draw a line in the sand and use the report we are publishing today to set out our expectations,” He added.

FSA officials recently investigated 22 firms and warned them against such unfair practices and unethical tactics. Wheatley has forced firms to put an end to the bonus-based banking culture and made firms who continue with their old sales tactics aware that they will be subject to huge fines if they don’t change their ways.

Earlier, FSA ignored hundreds of financial firms who were practicing the miss-selling of PPI to ineligible people and implementing smart tricks to make customers buy this expensive product just for the sake of doubling banks’ profits. This came into play due to the deceptive encouragement of bonus-based incentives, where most of the bank’s customer savings were converted into bonus packages for banks and banks’ salespeople.

Realising this, the FSA has now proposed many new strict guidelines that have to be followed vigilantly by all the financial firms in order to avoid any further mis-selling of any financial products.

The new rules of the FSA named the ‘Retail Distribution Review; (RDR) has made the cost of advice more flexible and affordable for customers who are struggling to find advice on financial services. The cost of this advice is made more transparent in order to help customers gain a better understanding of the financial products or services they are receiving; this should stop any further faulty practices.

These guidelines have been implemented to put an end to the incentive schemes that focus on personal profits. They also suggest that firms clean up their previous processes to give fair deals to their customers.

People who have been mis-sold PPI policies are approaching financial institutions or claims management companies to re-claim their PPI. Mis-selling of PPI has not only been carried out by banks and financial institutions but also by some third party brokers. Most of the large companies have made huge profits through this underhand practice and are now facing the consequences.

Reclaiming PPI is an easy process; although banks are rejecting applications from candidates to reclaim their money, there are several claiming companies who were able to make this process much easier.

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Complaints of Barclays customers soared

September 4th, 2012 No comments

There have been countless complaints from customers at Barclays recently, in relation to the mis-selling of PPI (payment protection insurance). The number of unsatisfied customers is expected to increase because of the various faux pauxs made by the bank.

In the first half of 2012, there were a total of 442,000 complaints from customers, out of which 280,000 were related to the mis-selling of PPI. This figure is a 76% increase on the number of complaints made in the first half of 2011.

The PPI mis-selling scandal has been affecting millions of banking customers. Now banks are paying compensation to the people who bought this insurance. PPI was sold alongside mortgages and other loans in order to cover any monthly payments if something unexpected happened. But, many banks have sold it to the people who have never attempted to claim, and so, are being penalised and are required to pay back the amount in compensation.

Barclay’s chief executive, Antony Jenkins, who was appointed on Thursday, said that the rise in the number of complaints is disappointing and they are going to focus on these complaints and try to resolve them.
Barclays was the most complained about bank in the nation in the second half of 2011. It has received about 282,899 complaints from customers and most of the complaints were related to PPI.

It has been recorded that British banks have paid out about £5.4bn in compensation for mis-sold PPI to date. However, analysts were expecting the final bill to be double that amount.

Barclays alone has paid out £1.3bn. Another major bank, Lloyds TSB, has paid out about £4.3bn. Barclays have said that after uncovering the complaints related to PPI, the number of complaints from customers was in fact 9% lower than last year, but 2% higher when compared to the last six months.

Experts and analysts are predicting that the other banks are going to produce similar results when they release their data figures.

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Barclays Faces Investigations on Qatar Payments

August 30th, 2012 No comments

On Wednesday Barclays confirmed that the SFO (Serious Fraud Office) has begun its investigations into the payments between the bank and the Qatar holding.

The bank did not disclose any details of the SFO probe. The FSA (Financial Services Authority) is already investigating this matter. It has been investigating four senior employees over fees paid to the Qatar authority in 2008. The bank disclosed the investigations of FSA last month when it released its half-year results.

The SFO investigations differ from that of FSA as it is examining the payments made by Barclays in 2008 as a part of Qatar capital raisings. Barclays raised more than £11bn in emergency funding in two separate cash calls in 2008.

A large amount of this came from the investors in the Middle East which includes £3.5 billion invested by Sheik Mansour Bin Zayed AI Nahyan of Manchester City, who belongs to Abu Dhabi’s royal family.

The pressure on Barclays will be increased due to the SFO probe. Barclays is experiencing its most turbulent period after being fined £290million for the UK and US regulators manipulating the Libor; it also faces a £450 million bill over the mis-selling PPI scandal.

“It’s perfectly normal to pay fees to internal bankers, lawyers and external bankers to look at fairness. This was a difficult time in the market,” said a London-based analyst at Mediobanca Spa, Christopher Wheeler.

Even though several banks are facing investigations over the Libor scandal, Barclays is the only bank which admitted the Libor rate manipulation. Due to this affair some senior employees, including Chief executive Bob Diamond, left the bank.

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