Payment Protection Insurance - Barclays Challenge Government ruling
Barclays scupper plans for PPI reform
Plans to restrict the sale of payment protection insurance (PPI) at the point when loans or mortgage are granted have been set back following a successful appeal by Barclays bank.
The Competition Appeal Tribunal has now been forced to instruct the Competition Commission to back down from its plan to ban PPI sales such as
mortgage protection insurance, at this point of the transaction. The Commission released a statement commenting that it would study the judgement closely before deciding what course of action it would take next. In a carefully worded statement however it was made clear that it was only this one small part of their strategy, to make choices clearer for consumers, that was being affected.
A spokesman for the commission commented "The appeal was upheld on one ground which relates to our assessment of the remedy prohibiting the sale of PPI at the point of sale of credit,” before adding that it was because The Commission had been asked to “reconsider the loss of convenience for consumers of not being able to buy PPI at the same time as taking out credit."
Intended to allow consumers a cushion for repayment of their credit cards, loans or mortgages should they fall ill or lose their job, PPI has been a bone of contention between insurance companies and banks and finance companies for some considerable time. Early this year the Commission outlined a range of limitations on the sale of PPI with some commentators claiming the lack of competition in the field has led to “persistently high prices”. The Commission had stated that from October 2010, lenders would be unable to initiate a sale of a policy for up to 7 days after granting a loan to combat the “point of sale” advantage that the lenders had gained.
However after challenging the Commission’s plan on four separate grounds – three of which related directly to the point of sale restriction, Barclays have successfully convinced a tribunal that putting this plan into place could put customers who actually wanted to purchase cover at a disadvantage.
Referring to the plans laid out by the commission as a “remedy without consent” the Tribunal concluded that the Commission had failed to take into account the “loss of convenience which would flow from the imposition of the point of sale prohibition”. The Tribunal also added that it was this “constituted failure to take into account a relevant consideration” that meant that the Commission would need to revise its plans once more.
However the overhaul of how PPI sales are regulated is still continuing at a rapid pace as complaints from consumer organisations and those who believe they have been mis-sold PPI grow exponentially. This year alone we have already seen the FSA tell banks and other financial institutions to compensate those who may have been mis-sold policies, re-open the 185,000 old complaints that have been dismissed, and stop selling the much criticised single premium PPI, whilst companies offering help and advice to claim back fees spent on mis-sold PPI has practically become an industry in itself.
Referred to as a “protection racket” in some corners of the industry due to abnormally high cost policies being sold to people who can’t actually make a valid claim under the terms of their agreements PPI providers added excess profits of £1.4bn to their coffers in the heady days of 2006 when the Competition Commission first began making enquiries into the sector.
As Martin Lewis of financial advice website moneysaingexpert.com succinctly commented “Bank-based PPI is a near con - it's hideously over-expensive, billions of pounds of it have been mis-sold, and the sooner it's cleaned up and cleared out the better.”
At a time when public faith in the entire banking sector is at an all time low how the public will react to this further delay in cleaning up what is a tainted section of both the banking and insurance worlds’ remains to be seen. However, the general consensus amongst financial commentators is again echoed in Mr Lewis’ comments "It's a shame Barclays has succeeded in using its lawyers to delay the implementation of such an important ruling"
Whether they have stemmed the tide for good, or as Mr Lewis suggests have simply delayed the inevitable is uncertain, but for the time being the Bank’s are refusing to let this go without a fight.
Kris Oldland
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WARNING DO NOT BUY PPI FROM A BANK - EVER!
Insuranceblogger urges consumers to shop around and buy
mortgage protection insurance from independent suppliers after they have researched the market. The point of removing PPI sales from mortgage and loan sales was to stop the consumer from being pressurised into buying overpriced products to secure the loan.
Once again a bank, admittedly not one overly involved in the toxic debt fiasco , but one intricately involved in the collapse of the banking system by it's failure to step in and rescue Lehman Bros. (until they had collapsed and they cherry picked the best bits!), is allowed to dictate to Parliament and interfere with the due process of consumer law!
Insuranceblogger recommends checking out alternative protection products such as
Lifestyle Income Protection Insurance which has wider covers and is not tied to any particular lump sum debt.
Labels: Barclays, mortgage, mortgage insurance, mortgage protection, mortgage protection insurance, mppi, PPI, UK government
Classic Car Insurance - A 20p Tyre Check could save £££’s
20p Tyre Check could save £££’s by Kris Oldland
A recent survey by classic car specialist dealership
Motorpoint has revealed that the majority of classic car owners feel that they are footing the bill for those who refuse to get insurance.
Over 80 percent of the recipients confirmed that they believe those caught without adequate
specialist classic car insurance cover should have their vehicles destroyed.
This rather satisfactory solution (considering the additional cost these cheats have added to your latest premium,) could soon become a reality as Paul Clark, road safety minister, included this suggestion in proposals he outlined recently.
It comes as part of the new government plans to further enforce the compulsory insurance of all motor cars within the UK. New measures mean that any owner of a vehicle which is taken onto a public road and caught without insurance will at the very least face fines and should they persist in breaking the law their vehicle could well be impounded and destroyed.
In response to the survey results David Shelton, Managing director of Motorpoint commented: "It is clear from our poll that the vast majority of people want something to be done to stop them having to foot the bill for uninsured drivers."
In other news Which? Car has recently recommended that taking the time to refresh your classic car safety knowledge is a vital way of staying safe, as well as avoiding avoid unnecessary insurance claims – adding that at this time of year ensuring the grip on your tires meets the necessary standards is a good starting point.
According to industry experts TyreSafe, as the weather starts to get wetter and the chances of losing traction and skidding increase, a particularly important test to ascertain the safety of your tyres is to insert a 20p piece into the main grooves of your tyres. If you are unable to see the outer band of the coin the tread is sufficient. If the outer band is visible then it is high time you replaced these often overlooked, yet crucial elements of your car.
Chairman of TyreSafe, Stuart Jackson also added : "Tyres are the only part of the vehicle in contact with the road surface so it is essential that they are in a condition that allows them to perform properly."
Meanwhile, the IAM, (Institute of Advanced Motorists) has highlighted the importance of ensuring that head restraints are correctly fitted - particularly within a classic car. An insurance claim could be the least of a drivers concerns if they are involved in an accident during which their head restraint wasn’t fitted correctly.
Figures released by road safety company
Brake earlier this year show that when fitted properly this often overlooked safety device can reduce the chance of whiplash by nearly 24 percent. Alarmingly though this same study showed that nearly three quarters of drivers surveyed had no idea how to adjust the head rests themselves.
Brake''s Fleet Safety Forum has recently launched the Move Up campaign to try and encourage more employers to ensure their workers know what they can do to avoid whiplash injuries.
One of the easiest ways to ensure you have the correct classic car insurance cover is to find a scheme suitable for your particlar model. It's easiest to use a specialist product and price comparison website to
compare classic car insurance such as that provided by
Car Insurance TVLabels: car insurance, classic car insurance, specialist car insurance
Marine Insurance - New for Old Cover?
A sea of change as marine assets plummet:By Insurance blogger Kris Oldland
The International Union of Marine Insurance (IUMI) has added its weight to a radical compromise proposal put forward by the influential Lloyd’s market underwriter Simon Stonehouse that
marine insurance underwriters should have the option of being able to purchase vessels at the current rock bottom values in replacement of lost vessels that have been insured at the previous peak market rates that were prevalent before the global economic crash.
This recommendation was delivered to a panel of IUMI members against a backdrop of plummeting asset values which has impacted hugely upon ship owners, many of whom are now facing loan defaults. Mr. Stonehouse – a senior underwriter for Brit Insurance, commented that “If a vessel is worth $60m yet an underwriter can go out and purchase an exact same type of vessel for just $30m, surely the underwriter should have that choice?”
With Moral Hazard proving to be another
boat insurance issue never far from debate in the current climate Stonehouse added he felt that although this unusual approach may draw criticism from some area of the industry “The intention, by pushing for value reductions, is to improve risk by eliminating moral hazard,” he argued. “But increased financial pressure can also increase moral hazard.”
Indeed Moral Hazard has emerged as one of the key topics of debate within the marine insurance and
ship insurance sector. With the shipping slump deepening at an alarming rate, the worrying situation of ship owner’s insured value being the worth more than the actual value of the ship they own has become more and more prevalent. In particular this has been evident since the market in secondhand vessels has now all but collapsed.
Chairman of the London Market’s Joint Hull Committee Peter McIntosh entered into the debate bringing managing director of Bankserve, Peter Mellett with him by publicly asking the finance expert to provide an overview in the role that he believes underwriters can play in saving ship owners from dreaded covenant defaults or even complete business failure.
In response Mr. Mellett told the IUMI it was his belief that the underwriting fraternity could become the catalyst which triggers an overhaul in lending policies and defaults if they were to continue to drive insured values to levels below those required by ship financiers. Mellett added “The issue is values. It is a debate beyond banks about how to address indemnity on hull and machinery policies. It is a great idea [purchasing replacement vessels], although I am not endorsing it.”
Adding further fuel to the debate Mr. McIntosh was noted to have tersely responded that if underwriters were “nervous about moral hazard” he strongly recommended that they “examine their relationship with their insured” and re-appraise their valuations.
Whether these strongly voiced opinions are borne out of necessity or frustration is yet to be seen. As is whether Mr Stonehouse’s honest yet somewhat unusual suggestions will actually take seed. If they do so it could mean a period of revolution within the sector. If they don’t then things will still be uncertain for some time as the economy slowly picks itself up from the series of sucker punches delivered across the last year.
Either way one thing is for certain – there are troubled waters ahead.....
Labels: boat insurance, Marine insurance, Risk Management, Ship Insurance
