However it now appears that the ‘not so ready to lend’ lenders, principally the banks and building societies who caused the mess in the first place, are now restricting the capital flow further with the provision of ‘new’ products designed to protect their capital and circumvent the recent legislation outlawing the selling of PPI (Payment protection insurance) at point of sale of the loan or mortgage.

Fortunately both the FSA and consumer watchdog , the OFT (Office of Fair Trading) have been keeping a close eye on these activities and have today issued a joint statement warning the providers of these products to obey the rules or face the consequences. Both UK Government organisations are determined that another PPI mis-selling scandal should be avoided as new mortgage protection products emerge.

The two quangos have joined forces on proposed guidelines to lenders in relation to new PPI type products, the responsibility for which can fall within either regulator’s area of operations.

The statement emphasises that now is a key time to reinforce the regulations as the insurance market shifts away from PPI and providers begin to develop new products or product features.

Under particular scrutiny are short-term income protection marketed as debt freeze or debt waiver when included with a credit or loan agreement or mortgage.

Some of the payment protection products that the FSA and OFT considered during the preparation of this proposed guidance are:

Insurance. This includes short term income protection or ‘STIP’, an insurance contract which provides a pre-agreed amount to the policy holder if they experience involuntary redundancy or are incapacitated through sickness or as a result of an accident and may be combined with other forms of insurance cover or include other benefits, and which:

o has a maximum time-limited benefit duration;
o is written for a term which is less than 5 years and not predetermined by the term of any credit agreement or RMC; and
o can be terminated by the Insurer.

Non Insurance the creditor agrees to freeze or waive the requirement on a consumer to make periodic repayments, or to freeze or waive interest or other charges, when a specified ‘event’ occurs, such as sickness or unemployment.

Insurance products are regulated by the FSA under the Financial Services and Markets Act 2000 (FSMA). Non-insurance protection linked to a regulated first charge mortgage contract are also regulated by the FSA. Non-insurance protection linked to a credit or hire agreement (including a second charge mortgage) will typically be regulated by the OFT under the Consumer Credit Act 1974 (CCA).

The two organisations will continue to monitor developments in the market, and will take appropriate action under their respective powers where products or practices risk causing detriment to consumers.

The FSA’s guidance stresses that firms should ensure that product features reflect the needs of the consumers they are targeting.

Margaret Cole, FSA managing director, said: “This is the first time that the FSA has issued guidance on the design of a specific product. Firms must learn the lessons of the past and make sure they have consumers’ needs at the heart of new product development.

“That is why we are acting early to ensure firms understand the risks they should bear in mind when designing these products, and how they can manage these risks when developing or distributing the product.

“The FSA cited new forms of payment protection products as an emerging risk in its Retail Conduct Risk Outlook earlier this year, and we are following up on that warning.”

The OFT’s guidance sets out how the OFT considers the Consumer Credit Act applies to payment protection products such as debt freeze or debt waivers linked to a regulated credit agreement, and what firms can do to ensure compliance.

In particular, firms should ensure that consumers are absolutely clear about the nature, price and implications of payment protection products.

For example, if an agreement is offered with an option to choose debt waiver terms, on payment of a fee, it may be necessary to provide financial information including and excluding the cost of the debt waiver.

The guidance also sets out examples of business practices in relation to payment protection products which the OFT is likely to regard as unfair or improper (whether unlawful or not) and so may cast doubt on fitness to hold a consumer credit licence.

David Fisher, the OFT’s Director of Consumer Credit, said: “It is important that the problems encountered with mis-selling of PPI do not arise in relation to new payment protection products.

“Firms need to ensure that they comply with relevant legislation and do not engage in unfair or improper business practices. In particular, they should make clear to consumers what they are signing up to and how much it costs, so that they can make properly informed decisions.”

The consultation will be open for ten weeks, closing on January 13.

With unemployment threatening to reach record levels as the public sector shrinks, it is essential that consumers can purchase protection against accident sickness and unemployment when they commit to a mortgage or large loan. Mortgages must be made easier to obtain and mortgage protection products available to alleviate some of the risks involved in lending for both parties.
There are many established independent specialist companies out there who offer insurance at much cheaper rates than the loan or mortgage providers. Maybe one solution to this ongong saga would be to outlaw totally the provision of cover for debt by the debt provider and its subsidiaries however they want to dress it up in fancy wordings.

Related posts:

1. Insurance Brokers Pay for UK Banks PPI Claims
2. FSA orders GBP 60 Million Mortgage Protection Insurance Repayments
3. Financial Ombudsman Service Overwhelmed With PPI Complaints

Payment Protection insurance (PPI) is in the news again with the UK financial complaints service, the Financial Ombudsman Service (FOS) reporting that its first quarter was the busiest ever with over 81,000 complaints – more than double the number received in the same period 2010.

Payment protection insurance, such as mortgage protection insurance, was the main reason for this substantial increase and the FOS have been receiving on average over 900 PPI cases each day.

Banks and others are already reporting record numbers of new complaints and it will be some time before we see the impact of those on our figures. So it’s difficult to tell whether we will be seeing still higher numbers yet – or whether the figures will now start to decline.

Tony Boorman, principal ombudsman at the FOS said, “When we come to publish the results for the next quarter, I expect the position on PPI will have changed again.”

“With complaints-handling rules ‘waivers’ agreed by the Financial Services Authority, the rate of new PPI cases has slowed – for the moment at least. ”

And the efforts by many banks to clear the backlog of cases that has built up should see record volumes of cases closed, and high uphold rates.

Bad Banks

Unsurprisingly, the bulk of complaints have concerned PPI after the banks lost an appeal on a ruling to pay back the policies in the High Court earlier this year. The period also saw both the High Court decision on the PPI judicial review and the decision by the British Bankers’ Association not to appeal that decision.

Figures from some of the banks this week have revealed that the PPI saga is having an adverse effect on their balance sheets.

Barclays said that its profits had fallen by 33% compared to the first six months of last year, with a £1 billion provision for PPI claims largely to blame.

Results from HSBC also showed the bank has put almost £270 million to one side to deal with customers’ claims.

Lloyds Banking Group has also previously revealed that it has put £3.2 billion aside to pay possible claims. PPI was sold by banks on unsecured credit products such as loans, credit cards and some mortgage products.

Santander is the latest bank, and the last of the  big banks to cave in and to set aside money to pay the compensation bill. Santander owns Abbey Alliance and Leicester and Bradford and Binlgley has set aside £543 million for PPI  claims.

In April, the banking industry lost its High Court challenge to new rules on the sale of PPI.

Among other things, the rules require sellers of PPI polices to review all their past sales to see if their customers have a claim for mis-selling, whether or not they have actually complained.

While the legal case was going on the banks put on hold tens of thousands of fresh PPI complaints that came in.

Santander was second, behind Barclays, in the list of most complained-about financial institutions during the second half of 2010.

Related posts:

1. Insurance Brokers Pay for UK Banks PPI Claims
2. Payment Protection Insurance Claims cost Lloyds Bank £3.2 Billion
3. What a bunch of Bankers! UK Banks challenge PPI ruling

Lloyds Bank  has decided to settle all the PPI misselling claims after UK banks lost a High court judicial review called by Barclays and others over PPI  claims compensation last month.

Payment protection insurance also known as ASU, Income Protection Insurance and Mortgage Protection Insurance,  was sold by the large banking corporations at inflated rates to cover in particular credit cards, personal loans and mortgage repayments  if income ceases or falls because of accident sickness or unemployment.

Since 2009 thousands of Uk complainants have received compensation because their policies were mis-sold. Missold, because they were sold policies that were either not explained to them, did not cover them because of certain exclusions or in the majority of cases was only taken out for fear of not obtaining the loan.

The Financial Services Authority (FSA) published guidelines last year which said banks should contact all PPI past policyholders to ask them to complain if they believed they had been mis-sold PPI.

Insurance Blog is pleased that the UK Government owned bank is leading the way on payment protection insurance compensation claims. The other banks will now have to follow suit.

It is only fitting that the big banks who were the main offenders in the misselling of PPI should be made to pay and not the hard pressed insurance industry, and particularly the Insurance Brokers, that has so far footed most of the bill with ridiculously high FSA fees, which in many cases has created barriers to entry for the UK Financial Services market.

On a footnote if the Bank of England keeps Interest Rates at the same level today, it will be a good day for the UK Public.

Related posts:

1. Payment Protection Insurance Claims and Premiums Rocket
2. Insurance Brokers Pay for UK Banks PPI Claims
3. Mis-Sold Payment Protection Insurance? Claim It Back Now!

Reading through the Insurance news this week you will find multiple stories from Brokers moaning about the ‘ridiculously’ high fees they are being asked for in order to trade. In some cases the fees have risen three fold on last years costs and many small operators are threatened with going out of business. In some cases the fees represent 20% of their income.

The reason, the FSA’s Financial Services Compensation Scheme to which all members have to contribute.

In the last couple of years the FSCS has paid out over a billion pounds in damages for claims to individuals who were mis-sold payment protection insurances (PPI), such as mortgage protection or loan protection primarily by – The Banks.

Yes those good old bastions of the British financial system, the Banks and not forgetting the Building Societies who were equally as guilty, had been systematically robbing their customers for years, who took out PPI on the back of their mortgages, loans and credit cards .

On average these institutions were charging in excess of five times the premium for the same cover that could be had from an independent supplier or Insurance Broker offering mortgage protection.

They got away with it for years because you and me the UK public were initially only too keen to sign their agreements to secure the loan!

When they finally got found out, thanks to the lobbying of Insurance Brokers, The FSA fined them all a pittance!

Now there’s a shortfall in the amount of cash needed to foot the bill, and guess who’s got to pay?

You got it – the very same Insurance Brokers who pointed out the misdeeds of the UK Banks and PPI  in the first place.

How mad is that!

So what do the FSA do and what does the Insurance Broker get for his fees?

Well from our experience absolutely nothing, until today that is, when a letter came in the post advising us to ‘cold shoulder’ this investment company we’ve never heard of on penalty of being struck off the register……

Meanwhile the UK Government owned Lloyds TSB Group owners of Halifax and Bank of Scotland have announced today that they finally will not be pressurising their customers into buying their PPI products!

Insurance Blog is of the opinion that the sooner the FSA is removed and replaced by another bunch of bureaucratic pen pushers the better and worse for us all………..

This time please keep the Bankers out of Insurance!

Related posts:

1. Small Insurance Brokers at Risk as Banks fail
2. FSA orders GBP 60 Million Mortgage Protection Insurance Repayments
3. What a bunch of Bankers! UK Banks challenge PPI ruling

And the UK Courts will probably be filling up with cases as fast as those dealing with the mis-selling of loan and mortgage protection insurance products as other legal firms jump onto the bandwagon.

Once again it will be Insurance that underwrites these ridiculous anti-social court cases……

Last week, a debtor secured a five-year block on his home repossession in a claims management case against his lender Blemain Finance, after consumer credit law was used to challenge his secured loan agreement.

The firm acting for Cardiff-based Peter Bentley, claims management company, Cartel Client Review, used the meaning of unfair relationships under Section 140A of the Consumer Credit Act (CCA) 1974 to claim that his loan contract with Blemain Finance was an unfair one.

Blemain also agreed to charge no further interest on the GBP 40,000 loan and cut his repayments from roughly GBP 550 to GBP 150 a month. At the High Court in Cardiff Judge Milwyn Jarman also prevented the lender from levying any charges or legal costs.

The judge barred Blemain for enforcing repayment via repossession for five years, but even after this period, it can only bring repossession proceedings if there are at least 12 months’ arrears on the new level of payments.

Bentley’s lawyers, Consumer Credit Litigation Solicitors (CCLS), successfully argued that Blemain had loaned the money to Bentley irresponsibly and that the agreement took advantage of his desperate situation.

CCLS argued that shortcomings in the decision making procedure on granting the loan, such as in the under writing, affordability checks and valuation processes, led to the credit agreement being unfair.

Andrew Settle, solicitor for CCLS, said: “The relationship between the parties was an unfair one within the meaning of Section 140A of the CCA 1974. CCLS is utilising a significant number of legal arguments, like those used on behalf of Mr Bentley, in thousands of cases on behalf of our clients.”

CCLS successfully demanded to have the loan account re written, which is believed to be the first time a loan account has been rewritten under settlement, as a result of the unfair relationships test.

Carl Wright, chief executive of Cartel Client Review, claimed that Blemain made the offer to Bentley in a bid to prevent a judge in a High Court setting a legal precedent against its lending practices.

He added: “The consumer credit rule book is being re-written as a result of High Court settlements like Blemain Finance Limited v Bentley. With consumer victories won recently in the Courts and landmark cases settled, and further cases to be determined by the High Courts, the consumer financial landscape will change irrevocably as we move in to 2010.”

Mr Bentley’s financial problems started when his mother died in 2007. He began part-time work to look after his father, who was suffering from Alzheimer’s, and then took out a GBP 40,000 secured loan in February 2007 to alleviate his financial predicament.

Bentley later fell behind with his repayments and by the time the case was heard in court, the debt had risen to GBP 47,000.

Related posts:

1. UK Debtors in trouble – credit crunch tightens
2. Loan Payment Protection Insurance Competition Commission report
3. FSA fines Alliance and Leicester £7m for misselling Loan Protection

If you took out a loan, mortgage or credit card from a bank or building society in the UK the chances are that you were mis-sold payment protection insurance or PPI as it is often known. The law has now changed and it is possible to reclaim all your payments in full plus in some cases, damages, usually at no cost to yourself through a so called no win no fee agreement..

The types of policies that were mis-sold were mortgage protection, loan payment protection insurance, Credit card insurance and in some cases and income protection.
Whether you qualify to claim depends very much upon when you were mis-sold the policy. The new law only covers payment protection insurance policies sold after January 2005. However, many lawyers will pursue on you behalf policies sold before the cut off date, and in many cases recover your payments. there are numerous no-win no-fee law firms starting up to pursue these errant banks and lenders through the UK courts in what has become a multi-billion dollar business.

The good news for the claimant is that these law firms handle everything for you and the only contribution you have to make is confirming the mis-selling took place and banking the check.

You are eligible to claim through the UK courts against a lender who mis-sold you payment protection insurance if you can satisfy any one of the following 13 conditions.

1. The PPI was added without your express agreement or knowledge.

2. The sales staff or person selling the mortgage or loan insurance was coercive, pushy and strongly advised you to take out the PPI cover.

3. You were told you had to take the payment insurance.

4. You were told you could not get the mortgage without MPPI.

5. You were told you could not get the loan without loan payment protection insurance.

6. The cover you were offered was included in the loan or mortgage

7. You knew you were soon to be unemployed.

8. You were self-employed when the payment protection was sold to you.

9. You were retired or over the age limit for PPi cover which is usually 65.

10. You were not asked about any pre-existing medical conditions that you may have suffered from.

11. You were not told that pre-existing medical conditions could affect your insurance cover.

12. You were not informed that the UK’s two largest problems for time of work, namely stress and back problems were excluded from the insurance/ or you informed the lenders staff about your medical condition but was not warned that this would affect the protection insurance cover in the event of a claim.

13. You were not asked if you already had any existing mortgage protection or loan insurance in place elsewhere or employer benefits that would cover my repayments.

If any of the above instances apply to you , you have probably been mis-sold payment protection cover and need to contact a solicitor or specialist lawyer who will claim on your behalf. Act now as there may well be additional time limitations put in place as the number of claims rises.

To learn more about mortgage protection insurance and how to make a successful claim visit Personal Accident plc.

For the latest news of the cheapest payment protection insurance available from independent UK suppliers visit the Payment Protection Insurance News website run by specialist provider Burgesses.com.

Insurance Blogger would like to thank Dave for the original Article Source: http://EzineArticles.com/?expert=Dave_Healey http://EzineArticles.com/?Have-You-Been-Mis-Sold-Payment-Protection-Insurance?&id=2417542

Related posts:

1. Payment Protection Insurance Claims and Premiums Rocket
2. Understanding UK Payment Protection Insurance
3. FSA says shop around for Loan Payment Protection Insurance

Insurance Blogger thinks this is outrageous after years of expenditure on the investigations by the FSA and Competition Commission and others, and the subsequent fines for misselling, that any institution, let alone a largely Government owned institution Lloyds Bank, should have the right to challenge any such decision!

Payment protection insurance lobbyist Sara-Ann Burgess from specialist payment protection insurance company, Burgesses confirms our viewpoint. She said “These institutions are without morals and intent on putting profit ahead of consumers’ interests.”
“This latest move is a bid by the banks to continue making billions of pounds in profits in order to prop up other failing business areas.
“We all know PPI mis-selling is rife amongst High Street lenders and their resultant profits are obscene. These delaying tactics, lodged to stop the ban going ahead in October 2010, only serve to prove just how shameless these firms are and the extent they will go to protect their ‘cash cows’.”

The UK Protection Insurance sector takes over £5 billion in premiums every year and around 90% of the premiums goes in profit to Banks and Building Societies.

In 2006, the Competition Commission reported the 12 largest distributors made profits of GBP1.4bn – before the recession kicked in and demand for unemployment insurance protection and income protection insurance policies grew.

After a lengthy investigation into anti-competitive practices, the Commission announced in January a series of measures to lower prices and widen choice in the PPI sector.

These included:
axing single premium PPI and replacing with monthly payments.
a seven day ban on selling cover alongside credit.
a requirement to offer PPI separately to credit.

The Financial Ombudsman Service predicted some 30,000 payment protection insurance mis-selling complaints would be received by the end of March this year and confirmed the majority of them can be traced back to High Street lenders.

It upholds at least 90% of cases and in the case of one lender, 100%.

Sara-Ann Burgess concludes: “How can you on the one hand say banks are working to restore confidence and then on the other have two major players challenging decisions in order to maintain gigantic market shares and prevent freedom of choice? Actions are certainly speaking louder than words. These lenders are damaging the financial well-being of consumers and will continue to do so. What’s equally insulting is the fact that Lloyds is paid for by taxpayers and our money is being used to ensure we continue to be ripped off.”

Insurance Blogger couldn’t agree more! The banks created the current recession by the misselling of mortgages and piggybacked missold mortgage payment protection insurance, and now they are trying to retain their ill gotten share of a market that wouldn’t exist if they had done their job properly in the first place.

BancAssurance is a French joke – Keep your noses out of Insurance – Bankers!

For those of you still in a job, we wholeheartedly recommend Burgesses Unemployment Insurance

Related posts:

1. PPI – ignore after sales follow ups
2. Banks Overcharge for Payment Protection Insurance
3. Credit Cards – time to bring the Banks to order!