This was an increase from the £268m paid out in October 2011, the Financial Services Authority (FSA) said.

PPI was supposed to repay people’s loans if their income dropped because they fell ill or lost their jobs, but thousands were mis-sold the policies.

The figures are supplied to the FSA by 16 unnamed firms.

These firms accounted for 92% of all PPI cases in the first six months of 2011.

After losing a High Court test case in April, banks were told to deal with 200,000 complaints which they had put on hold pending the hearing’s outcome.

Redress paid to customers has climbed dramatically since the conclusion of the judicial review.

Earlier in January, the Financial Ombudsman Service (FOS) said there had been a renewed surge in PPI complaints in the final three months of 2011.

The FOS received 55,907 complaints in the final quarter of the year, up by 10% from the previous three months.

Alan Hoey, MD of RBC MON£Y said that “banks are getting better at some processes to repay clients but the path for complainants was not as simple as it should be, and if the case has to be referred to the FOS, the length of time for a complaint to be resolved either way could well exceed 12 months which is totally unfair to complainants.” He added “Should the FOS move a team into each bank and help directly at source to get things handled quickly, promptly and more importantly fairly and in line with normal complaint timescales. Surely if the banks repaid the estimates £9.5 BILLION pounds to consumers more quickly this would have an overall good effect for the economy on a whole.”

“Maybe Stephen Hester can earn some of his £900,000 shares bonus in RBS in looking closely at missold PPI and helping clients get fair treatment.”

http://www.bbc.co.uk/news/business-16741396

That is the equivalent annualised percentage rate, or APR, of 819,100%.

Eric Leenders, from the British Banking Association, said that the industry was willing to look at concerns, but he said that using APRs to calculate the cost of unauthorised borrowing was a “mathematical manipulation” because the fees are representative of borrowing on an overdraft facility, not for borrowing the specific amount of money.

Mike Dailly, from the Govan Law Centre, said the government must review unauthorised overdraft charges.

“What we’ve got here is banks with equivalent APRs of nearly one million percent. It really is eye-watering.”

High cost Comparisons between banks and so-called payday lenders showed that the annualised percentage rate charged for borrowing £100 over 28 days varied from 969% to 819,100%.

No payday loan lender charged an APR of more than 5,000% but two banks – Santander and Lloyds TSB – charged an equivalent APR of more than 300,000%.

Santander told the BBC: “It’s is confusing to compare payday loans with overdrafts on current accounts because an unauthorised overdraft charge is for unauthorised use of a current account while a payday loan is an agreed loan facility.”

Barclays would charge a customer using a personal reserve – a pre-agreed emergency borrowing facility – £22 for every five consecutive working days they were in it. This means customers would pay £88 on top of the £100 capital after 28 days – an equivalent APR of 366,000%, which could increase dramatically in March 2012

Mr Dailly said the situation is worrying for consumers. “The Romans 2,500 years ago managed to cap lending charges at 8%,” he said. “States in America have outlawed payday loans and effectively capped the cost of lending. These companies have come over to our country and they’ve said they want to operate in our deprived communities because that’s where their business is.”

Money Box has received a steady stream of emails from bank customers this year complaining about the level of charges.

One of them, Marc Daffern, from Stamford, was told he had accrued £775 in charges for an unpaid direct debit of £6.99 from his bank, NatWest.

He said: “I was offered to be allowed to pay it off at the lower amount of around £400 but I wasn’t willing to do so because as far as I’m concerned I shouldn’t owe them any of this money in the first place.” NatWest said that it is investigating Mr Daffern’s complaint.

Payday lender growth

The payday loan market has expanded rapidly in the last decade.

Lenders typically lend amounts up to £1,000 for up to a month. Applications are processed quickly and the borrower can typically receive the money the same day. But the quick availability of credit comes at a cost, typically an APR of around 2,000%.

The Citizens Advice Bureau has said it is too easy to obtain such credit and has called for tighter regulation. But Consumer Minister Ed Davey believes that tougher measures could push people into the hands of illegal loan sharks.

Last month, the Department for Business, Innovation and Skills (BIS) published a report on consumer credit.

In the report, the BIS said that commitments made by High Street banks will “deliver a fairer, more competitive market and mark a real improvement for consumers”.

The BIS said that it is aware of an upsurge of concern regarding the rapid increase in the use of payday and other instant lending, and dialogue has already started with the industry on introducing enhanced consumer protection in their codes of practice.

The Office of Fair Trading said the payday loan industry was worth about £115m in 2004. According to a report by consumers’ association Which? that figure was £1.9bn in 2010.

Bank charges

The maximum charged for borrowing £100 for 28 days from a payday loan company is £42.

That is compared to unauthorised borrowing charges of £100 with Santander, £88 with Barclays and £86 with Lloyds TSB for the same sum of money over the same period.

Mr Leenders, from the BBA, told Money Box: “There are better ways of covering short-term credit for small amounts. It may be more cost effective to arrange an overdraft or put the purchase on a credit card.”

In 2009, UK banks won a Supreme Court case that had been brought to challenge the legality of large overdraft charges.

In explaining his ruling, the Supreme Court’s president, Lord Phillips, said that bank customers agreed to pay overdraft charges as part of the price of having a current account, so they fell outside the scope of the 1999 consumer contract regulations.

But in the aftermath of the ruling, most banks did agree to reduce the level of their charges.

However, although the charges have been reduced in some cases the number of times a customer can be charged in one month has gone up.

The OFT said that under the Consumer Credit Regulations Act of 2010, businesses do not need to state an APR for “any charges payable due to non-compliance with commitments contained in the consumer credit agreement”.

Alan Hoey, Managing Director of RBC MON£Y said “the scale of these charges is excessive and unfair, whether banks Terms & Conditions say that charges may apply which they think covers them it is unbelievable that they continue to get away with it and new rules in the Consumer Credit Act section 140 should cover these types of charges as excessive and unfair”.

“If someone tells you they are going to punch you in the mouth and then they do it, because they have given pre-notice of their intentions doesnt mean the following act is legal.”

He continued by saying “The banks are continually looking at legal clauses to exploit UK consumers and use the legal system to rip off consumers on large scales. Why can the Government not give a clear and precise message to the banks that this is not acceptable. RBC MON£Y will represent claims for sonsumers who have incurred Bank Charges for unauthorised overdraft charges since 2007 and will take whatever steps are required to ensure excessive overdraft charges are exposed. What about consumers with low incomes, unemployed and those on benefits who incur these charges. What about those consumers who have a month of hardship and incur these charges sending them into the snowball effect of the bank charges nightmare. It is totally unacceptable and we would urge anyone who has suffered from these charges to get in touch with us for help.”

At present, there is a maximum charge of £8 a day if direct debit or standing order payments exceed the total funds in the account.

However, from March, this could increase to up to £24 a day.

That is because a limit of just one transaction charge occurs at present, but this will be extended to charges for each of up to three missed payments in a day.

Barclays’ move follows changes made by other High Street banks to cash machine access for customers with basic bank accounts.

Changes

Basic bank account customers at RBS and Lloyds Banking Group – which includes Halifax and Bank of Scotland – are being restricted in the number of cash machines they can use.

The banks blamed high costs for the changes.

Those with basic bank accounts with Barclays will not have the same restrictions on ATMs. Instead, the bank has decided to cut costs by increasing the frequency of charges.

It will also save money by a default option of only sending out paper statements once every three months, rather than monthly, although customers can ask for a statement each month if they would like it.

However, a £2 a month charge for a text service to alert account holders that they are close to emptying their funds has been cancelled. The service is now available free.

Watchdog Consumer Focus is critical of all of the three banks’ changes to basic banking which it says discourages the poorest and most vulnerable from using bank accounts.

“These changes to basic bank accounts are a backward step by banks which could increase financial exclusion,” said Oliver Morgans, of Consumer Focus.

“Living without a bank account can make it hard to live in the 21st century and can create financial penalties for the households who can least afford it.

“The government already faces an uphill struggle to persuade customers to sign up to a bank account when many people distrust banks and the charges they make. These changes will make that hill even harder to climb.”

However, a Barclays spokesman said: “We want to ensure this product remains financially sustainable so that we can continue to help those at risk of financial exclusion gain access to banking.

“We also want to ensure the product continues to meet the needs of those it is designed for. The changes we are making are based on solid research of our customer base and Citizens Advice Bureau clients.”

Alan Hoey, Managing Director of RBC MON£Y said the move is a scandal and said “Barlcays will now be watched very closely by us and any clients who complain to us about overdraft charges will be offered claims assistance to help recover these charges. The OFT let millions of consumers down by losing the Bank Charges Test Case and the banks now see an opportunity to make extra revenue because of the Governments lack of support over bank charges. Its a vicious circle and those who get caught in the overdraft charges trap for 1 full month at Barclays could see charges of £24 a day which could mount up to over £700 over 1 month which could seriously affect the financial stability of the consumer and cause horrific knock on effects”

“Anyone who has been charged unfair overdraft charges please contact us, the courts, Government and OFT have let you down, RBC MON£Y will not and will continue to fight for fairness for those who incur these unfair, excessive and ridiculous charges.”

Please sign our Bank Charges petition at No.10 Downing Street by clicking the link below and show your support that Bank Charges are unfair and action is needed today.

http://epetitions.direct.gov.uk/petitions/17370

The banking industry has set aside an estimated £9bn to pay for the mis-selling of PPI.

Customers were awarded compensation plus interest of 8% by the Financial Services Authority on the money they originally spent on PPI.

This interest will be subject to tax – earning the government tens of millions of pounds.

A spokesman for HM Revenue & Customs told Radio 4′s Money Box programme: “No tax is generally due on the repayment element of compensation paid to those mis-sold PPI.  However, the additional interest is taxable – in line with other compensation claims.”

They said that “Nobody should be worse off, as had the customer not purchased PPI, but kept that money in an interest-bearing account, the interest received would have been taxable.

“Customers should check with their PPI provider as to whether tax has been deducted at source.”

HSBC, Barclays, Lloyds and the Co-operative Bank have said that they will not be deducting the tax at source. However, RBS/Natwest said it will. Loan companies are required to deduct the tax.

Confused customers

Banks have been writing to their customers explaining that they need to contact HMRC themselves to discuss what tax is due on the interest payments.

Vivienne Wachenje, from Essex, who has received compensation from the Co-operative Bank said: “In the document that they sent me they said that I would need to be paying £94.88 tax which I don’t really understand at all, it’s just a bit more gobbledegook.”

She objects to having to pay anything: “The customers were wrongly sold PPI in the first place so why should we have to pay anything at all?”

Credit card customers do not automatically receive interest at 8%. They only receive this if the value of the PPI refund would have meant that they were in credit.

Mike Warburton, tax director at Grant Thornton, said the government would be due a significant sum in tax: “The compensation will attract interest at a relatively high rate of 8%. This will be taxable and the government will expect to raise several hundred million pounds from this.”

Alan Hoey, Managing Director of RBC MON£Y said “while everyone takes their share, Consumers should be refunded quickly and efficiently and not require further intervention by the FSA regarding the way complaints are being dealt with – or NOT as the case may be. BILLIONS of pounds wronglyfully taken from sonsumers should be refudned quickly and easily back to consumers to ‘ease’ current fianncial stress and ultimately put that money rightfully back into the community and the economy keeping the wheels turning while in the current economic climate”.

BBC Radio 4′s Money Box 

Banks can play a key role to help, he said, but must also apologise for mistakes and show they can contribute to society.

He made the comments in the first BBC Today programme business lecture, and subsequent Radio Four interview.

Learning from mistakes

Mr Diamond, whose total pay packet last year was worth £9m, also said banks should never again have to be bailed out by the taxpayer.

“No taxpayer money should ever again be put at risk to rescue a failed or failing bank,” Mr Diamond said.

And he acknowledged in his radio interview that many people in society feel angry that no one has been held to account for the banking crisis.

“I understand why many people wonder if anything has really changed,” he said.

UK taxpayers had to step in to bail out RBS and Lloyds Banking Group during the 2008 financial crisis, but Barclays did not take any direct capital.

He felt that Barclays itself had been unfairly tarnished by the failures of other banks. But he accepted, too, that Barclays had had its problems, with the mis-selling of payment protection insurance, for example.

“We have not done a good enough job. The number of complaints is too high. We can learn from those mistakes, apologise, and make sure it never happens again,” Mr Diamond said.

“While Barclays have put aside over £1 billion pounds to refund consumers caught in the mis-sold PPI scandall, why are their complaints teams not dealing with complaints adequately and quacker and getting the money back into the pockets of those consumers affected” said Alan Hoey, MD of RBC MONEY Ltd.

“We see daily the banks say one thing and do another – has or will anything ever change?”

It asks whether the voluntary guidelines that bailiffs are meant to follow are enough to protect the public.

Press releases 2011 -

OFT launches revised debt collection guidance

October 2011

 The OFT has today published its updated Debt Collection Guidance which sets out the standards expected of all businesses engaging in the recovery of consumer credit debts, including banks, law firms and tracing agents as well as traditional debt collectors.

It also sets out specific business practices that the OFT considers to be unfair or improper, such as using Facebook and Twitter and other social networking sites to contact debtors, as well as contacting debtors at unreasonable times, or at inappropriate locations, for example when they are a patient in hospital.

More generally, the guidance:

1. warns against misuse of continuous payment authority to recover debts, such as making recurring attempts to recover a single repayment
2. highlights the responsibilities of all parties involved in the debt recovery process, including creditors, for the quality and level of information they maintain and exchange with others, in order to avoid the wrong person being pursued for a debt
3. provides greater clarity on the OFT’s position on issues such as reasonably queried and disputed debt and statute barred debt
4. makes debt recovery businesses aware that they should adopt appropriate practices and procedures for dealing with particularly vulnerable debtors.

David Fisher, the OFT’s Director of Consumer Credit, said:

‘In the present economic climate, with many people, including those who may be particularly vulnerable, in financial difficulties, it is crucial they are treated fairly by companies recovering their debts.

‘This updated guidance makes clear the standards the OFT expects of all businesses involved in debt recovery, including debt collectors, banks and law firms.’

NOTES

1. See Debt Collection - the OFT’s guidance for all businesses engaged in the recovery of consumer credit debts.
2. The OFT produced its original Debt Collection Guidance in July 2003, and updated it in December 2006.
3. This latest version of the Guidance was subject to consultation between 10 March and 2 June 2011. 65 responses were received to the consultation and, in addition, a number of consultation workshops were held.
4. The OFT accepts that in England, Wales and Northern Ireland, statute barred debt still exists and is therefore recoverable. However, the Guidance sets out certain practices in relation to the recovery of statute barred debt that the OFT considers to be unfair or improper. In Scotland, statute barred debt is ‘extinguished’ and is consequently no longer recoverable.
5. Any queries on the content of the new guidance may be emailed to dcguidance-review@oft.gsi.gov.uk or write to: Ms Jane Shepherd, Consumer Credit Group, Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX.
6. The OFT will be updating its Irresponsible Lending Guidance later this year to reflect the position in the Debt Collection Guidance.
7. The Consumer Credit Act 1974 requires most businesses offering credit, lending money or involved in activities relating to credit or hire, such as debt collectors, to be licensed by the OFT. The OFT produces guidance to clarify its expectations of those companies and individuals that hold a consumer credit licence. Failure to have regard to OFT guidance can call into consideration the business’ fitness to hold a consumer credit licence.

For advice on dealing with debt, see http://www.debtlineuk.co.uk/ 
or call FREE from landlines and mobiles on 0333 5 777 963.

How to cut energy costs Getting the best energy deal

Reduce your bills by choosing a dual fuel tariff and paying by direct debit

There are plenty of things you can do to reduce your energy usage - but one of the easiest ways to cut your energy bills is to make sure you on the cheapest deal. Choosing the right tariff could save you hundreds of pounds a year.

Where to find the cheapest energy deals

There are several ways to switch to a new energy tariff, including over the phone directly with an energy supplier and online through a switching site. But which is better?

In the ‘Which’ November 2011 investigation, they called the six major energy suppliers 12 times in one week and asked for the cheapest deal. Disappointingly, in nearly a third of the calls the energy companies failed to offer their cheapest tariff. And Which were also given questionable advice about potential savings, cashback deals and fixed prices.

Which are working with the energy companies involved and the energy regulator Ofgem to get these issues sorted out, but for now we think the best way to find the cheapest energy deals is by visiting an independent energy comparison website. Here you can discover all the deals available to you, and can browse the tariff details in your own time. 

RBC Energy are an independent energy broker which means we receive a commission from the energy company if you sign up through us. RBC Energy have some of the very best rates available in the UK and our Consumer Focus accredited comparison calculator lets you see exactly what tariffs are on offer and what you could save compared to your current supplier.

We’ve also got a free telephone number 0800 310 2186 with sound regulated advice should you wish to discuss any tarrifs or get more information.

Visit RBC Energy today and see what we can save YOU.

The FSCS found that Welcome Finance, part of the Cattles group, was effectively insolvent. Cattles has specialised in lending small amounts of money to people who cannot borrow elsewhere.

It has been bought by a specially-created company called Bovess after a two-year financial cisis.

Welcome Finance, which has sold 500,000 PPI policies but will not be able to meet any claims against it, has already been closed to new business.

The two other parts of the Cattles group, Shopacheck and the Lewis debt collection firm, are now profitable and are also now under the control of Bovess.

“The announcement paves the way for the FSCS to compensate consumers who were mis-sold PPI policies by Welcome Finance on or after 14 January 2005,” said FSCS chief executive Mark Neale.

About 380,000 people have taken out PPI polices while borrowing from Welcome Finance and some have already claimed and been compensated. The remainder, if they make a valid claim, could receive 90% of any financial loss they may have suffered, such as paying premiums on policies which are found to be mis-sold.

The FSCS said under this arrangement customers could expect to receive any compensation much faster than if Welcome Finance had gone into a formal insolvency procedure such as administration.

“Policyholders can be assured that the FSCS will remain responsible for all decisions on claims, which will be made in accordance with FSCS rules, and that the FSCS will closely monitor and oversee all steps in the handling of claims.”

Cattles was plunged into financial difficulty in 2009 when accounting irregularities were uncovered. It was eventually revealed that the company had suffered a pre-tax loss in 2008 of £745m. By the end of 2009 the company’s debts outweighed its assets to the tune of £1.1bn

RBC MON£Y still represent clients old and new and can deal with your claim whether directly to the bank, through the Financial Ombudsman Scheme, FSCS, the courts or any other entity where neccessary. Our claims handlers are experienced and can help you every step of the way.