Banks may be forced to pay back £4bn in mis-sold insurance scam

By
Sean Poulter
Last updated at 6:17 PM on 09th March 2010

Banks and insurance companies may have to pay a staggering £4billion 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.
Salesman sold PPI to those who would never be able to make a claim, including pensioners
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 £700million 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 said paying refunds and compensation could lead to a bill of £1billion to £3billion for banks
The FSA has previously fined a number of household name banks and insurance groups for mis-selling PPI.Last year, the Swinton group, the high street insurance broker, was fined £770,000 for serious failings. It also agreed to contact  over 350,000 customers to offer a full refund.In December 2008, Egg was fined £721,000 for serious failings in its sales of credit card PPI. Previously, Alliance & Leicester was fined £7million, while a number of motor dealers have also been fined over the sale of PPI alongside car loans.The watchdog yesterday announced a further consultation on plans to control the future sale and regulation of the controversial policies.The measures, which are opposed by finance giants,  will prevent banks and others using hard-sell tactics to pressure customers to take out the policies.The delay has been triggered by objections from the finance industry and generated condemnation from consumer groups.Chairman of the Financial Services Consumer Panel, Adam Phillips,  said: ‘For too long, firms have been letting down their PPI customers by not handling their complaints fairly. ‘It seems that too many firms have regarded PPI as an easy product to sell and make money, without considering whether it really is right for the customer.  ‘Now the industry seems determined to fight against the FSA introducing new rules and guidance which would ensure consumers receive a fairer outcome if they make a complaint.  ‘However, this is no reason for the FSA to back off… Consumers need tough action from the FSA.’He added: ‘We are also concerned that this consultation reveals yet another delay in getting fair treatment for PPI consumers.’The FSA’s director of conduct risk, Dan Waters, said he was ‘disappointed’ that the industry has criticised its attempts to clean up sales of PPI.He added: ‘We remain 100 per cent committed to bringing about genuine, lasting change in the PPI market.  We remain firmly of the view that the PPI market is broken and needs to be fixed.’The finance industry insists PPI is an important safety net for consumers, particularly during a recession when there are concerns about rising unemployment. 

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Postal workers announce THIRD wave of strikes as Tories vow to sell off Royal Mail to stop future walkouts

By
Jason Groves and Arthur Martin
Created 11:33 PM on 29th October 2009

The full scale of the damage caused by the postal strike was laid bare last night - as union bosses vowed to ‘ intensify’ the bitter dispute.
Marks & Spencer became the latest household name to confirm it was cutting its use of the Royal Mail as a direct result of the industrial action.
As unions began a three-day strike, the high street giant confirmed its online business was turning to other carriers to beat the strike.
Extra work: A TNT van outside the Royal Mail centre in Coventry. The postal strikes have given the company has 10 per cent more business
Rival firm TNT reported business was up 10 per cent, with a spokesman declaring: ‘It’s an attractive position for us. Long may it continue.’
Meanwhile councils were forced to extend the deadline for applications for school places and take on extra staff to handle the expected backlog.

The developments came as union bosses vowed to step up the strike, despite warnings it could fatally damage the Royal Mail and create chaos in the run-up to Christmas.
Billy Hayes, the head of the Communication Workers Union, said: ‘There is every prospect that we will increase the action and we could be looking at longer strikes.’
The CWU failed to announce further strike dates last night, but sources said this was because it was still discussing the best way to ‘intensify’ the strike and cause maximum disruption.
Options include calling longer strikes or moving to all-out strikes.
Tory post office spokesman Jonathan Djanogly described the decision to step-up strike action as ’suicidal’, and warned Royal Mail could suffer a huge, permanent loss of business as a result.

Mr Djanogly said: ‘We are entering the most sensitive time of year for the post as businesses and individuals gear up for Christmas. To call further strikes now would be deeply damaging for everyone involved.
‘The unions should call off the strikes, get back to work and negotiate with the management while the Royal Mail still has a future. Without modernisation there is no future.’
Nigel Wood of the consumer watchdog Consumer Focus warned that further strikes would cause ‘a Christmas of chaos for consumer and businesses alike.’
Mr Wood added: ‘It is vital that Royal Mail and the unions resolve these issues as soon as possible if they are to restore customers’ faith in the service and retain their business.’
In the Commons MPs accused ministers of failing to show leadership in resolving the dispute.
Sir George Young, Shadow Commons Leader, said the Prime Minister ‘appeared to have given up’ and the ‘normally ubiquitous’ Business Secretary Lord Mandelson had ‘ disappeared’.
It also emerged the CWU has written to 40 employment agencies reminding them of their ‘legal responsibilities’ not to supply workers to do the jobs of striking staff.
The union is considering legal action against Royal Mail over its decision to draft in 30,000 temporary workers. It claims Royal Mail’s modernisation programme could destroy up to 60,000 jobs and send the company into permanent decline.
Royal Mail insists the changes are essential to the survival of the business in a competitive market. 

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Union’s threat to ‘intensify’ its crippling postal strikes

By
Jason Groves and Arthur Martin
Last updated at 9:02 AM on 30th October 2009

The full scale of the damage caused by the postal strike was laid bare last night - as union bosses vowed to ‘ intensify’ the bitter dispute.
Marks & Spencer became the latest household name to confirm it was cutting its use of the Royal Mail as a direct result of the industrial action.
As unions began a three-day strike, the high street giant confirmed its online business was turning to other carriers to beat the strike.
Extra work: A TNT van outside the Royal Mail centre in Coventry. The postal strikes have given the company has 10 per cent more business
Rival firm TNT reported business was up 10 per cent, with a spokesman declaring: ‘It’s an attractive position for us. Long may it continue.’
Meanwhile councils were forced to extend the deadline for applications for school places and take on extra staff to handle the expected backlog.

The developments came as union bosses vowed to step up the strike, despite warnings it could fatally damage the Royal Mail and create chaos in the run-up to Christmas.
Billy Hayes, the head of the Communication Workers Union, said: ‘There is every prospect that we will increase the action and we could be looking at longer strikes.’
The CWU failed to announce further strike dates last night, but sources said this was because it was still discussing the best way to ‘intensify’ the strike and cause maximum disruption.
Options include calling longer strikes or moving to all-out strikes.
Tory post office spokesman Jonathan Djanogly described the decision to step-up strike action as ’suicidal’, and warned Royal Mail could suffer a huge, permanent loss of business as a result.

Mr Djanogly said: ‘We are entering the most sensitive time of year for the post as businesses and individuals gear up for Christmas. To call further strikes now would be deeply damaging for everyone involved.
‘The unions should call off the strikes, get back to work and negotiate with the management while the Royal Mail still has a future. Without modernisation there is no future.’
Nigel Wood of the consumer watchdog Consumer Focus warned that further strikes would cause ‘a Christmas of chaos for consumer and businesses alike.’
Mr Wood added: ‘It is vital that Royal Mail and the unions resolve these issues as soon as possible if they are to restore customers’ faith in the service and retain their business.’
In the Commons MPs accused ministers of failing to show leadership in resolving the dispute.
Sir George Young, Shadow Commons Leader, said the Prime Minister ‘appeared to have given up’ and the ‘normally ubiquitous’ Business Secretary Lord Mandelson had ‘ disappeared’.
It also emerged the CWU has written to 40 employment agencies reminding them of their ‘legal responsibilities’ not to supply workers to do the jobs of striking staff.
The union is considering legal action against Royal Mail over its decision to draft in 30,000 temporary workers. It claims Royal Mail’s modernisation programme could destroy up to 60,000 jobs and send the company into permanent decline.
Royal Mail insists the changes are essential to the survival of the business in a competitive market. 

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Snaphappy Spaniard keeps Kodak in the frame

By James Hall

Published: 7:40PM BST 20 Sep 2009

Antonio Perez, the chairman and chief executive of Kodak, the camera and
digital technology company, had a novel way of telling staff in its film
factories that they were about to lose their jobs.

“I went in and without saying my name I said, ‘Please stand up if you
have a digital camera in your house’. Forty per cent would stand up. I would
say ‘Thank you very much. I am Antonio Perez and we have a problem’,”
he explains.

The problem, he would tell the workers, was that old-style camera film – the
US company’s bread and butter – was being eclipsed by digital technology.
This was in 2003 and almost all of the company’s business came from camera
and movie film stock. Although Kodak was a household name, unless it altered
its business to adapt to new technology it might not have survived to see
2005.

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Spare a thought for the undeserving rich

A group of leftists and centre-leftists have come together in ecumenical communion to call for the establishment of a High Pay Commission. The 100 signatories to the request include Lib Dems, Labourites, Greens and lecturers in media studies, and their most famous champion (in these days when the General Secretary of the TUC is no longer a household name) is the Lib Dem Shadow Chancellor, Vincent Cable. The argument of the 100 signatories is that, just as in 1997 there was a case for the Low Pay Commission to tackle the problem of low pay, so today we need a commission to tackle the problem of high pay.
One enjoys the symmetry while noting the difficulty it causes. Low pay is obviously a problem for the low paid, and is (for all but the most grinding mill owner) a clear social evil. High pay is a less obvious catastrophe for those who are the recipients of it, explaining the absence of the Child Affluence Action Group, Rich Concern and War on Wealth. And it isn’t an entirely clear problem for those who are not recipients of it either. I might envy the ownership of a Porsche (I don’t, actually) but is Porschelessness such a huge difficulty?
At first Dr Cable seems (in an article timed to coincide with the new campaign) to say that it is. “The past decade,” he writes, “has seen widening differences in income and wealth, which taxation and regulation have failed to address.” So presumably the High Pay Commission will, in some way, deal with that. The TUC General Secretary (whose name is Brendan Barber) targets “the growing gap between executive and employee pay [which] has a damaging impact on staff engagement and has created a new class of super-rich that float free from society”. Professor Ruth Lister highlights the way in which very high pay “erodes the bonds of common citizenship; undermines the principles of equal opportunity and the recognition of equal worth; and has fuelled the credit crunch”.
This seems fairly clear. People earning vast amounts is bad for the rest of us, and it would be good to stop it happening. But not so fast. Dr Cable quickly qualifies thus: “There is nothing intrinsically offensive to most people about talented inventors, entrepreneurs, performers or sports stars benefiting substantially from unique talents that enrich or protect or entertain the rest of us.” In other words, it is only some high earners whose wealth is sufficiently offensive for us to want to restrict it — inequality is not the issue. They are what might be called the “undeserving rich”: those who attract “reward without merit” and are involved in “tax- dodging”. Dr Cable further narrows down this problem by suggesting that the new commission could decide that some of the apparently undeserving wealth gatherers are actually kosher dosh pullers “even if they offend natural justice and our sense of fairness”. Thus rather undermining Professor Lister’s rationale.

I can see that a bonus culture that rewards excessive risks taken with other people’s money and not your own is undesirable. I also agree with Dr Cable when he suggests that many high earners develop an exaggerated notion of their own marketability to justify stratospheric reward. I know several executives at the BBC (and I am sure that they in turn know many people in commercial media) who would probably struggle to earn half their current salaries outside the corporation. I have met some very wealthy people who believe the mythology that they earn what they do relative to others purely or even mainly as a consequence of their own ineffable qualities, rather than as a part consequence of luck and birth.
But that’s all a slightly different matter. The very wealthy are a tiny proportion of the population. £120,000 per annum puts you in the top 1 per cent of salary earners, £60,000 in the top 5 per cent, £32,000 in the top 25 per cent. And £25,000 makes you average — if you’re a full-time worker. The super bonus earners — the apparent target of the High Pay Commission — are fewer than 0.1 per cent. Even if you took away half their money (and the recession has probably accomplished much of that) the beneficial social or economic impact on the rest of us would be minimal, if anything at all. The only obvious positive consequence of setting up such a commission would be the ability to say that you had one and that you were having a good go at the Goodwins.
Some research carried out by the Fabian Society for the Joseph Rowntree Foundation, published earlier in the summer, seemed to suggest that there was no huge public appetite for an attempt to restrict top pay. There was a rather touching belief in the notion that the wealthy had somehow deserved their wealth, as there was a rather worrying acceptance that the poor in some way deserved their poverty.
Why? Perhaps because those surveyed — almost no matter what their own income and circumstances — put themselves “in the middle”, the position which, 79 per cent agreed, was the most uncomfortable of all because it didn’t offer “the rewards of the rich” or “the benefits of the poor”. Interestingly, too, the respondents imagined average earnings to be higher than they actually were.
This misperception, it occurred to me, is more of a problem than the pay of a tiny, unlovely and easily attacked minority. And it is a misperception shared by the wealthy (ie, those earning more than £100,000), who were found to believe recently that the average wage in Britain is roughly double the true figure. They had no idea how much richer they were than most people, and most people had little idea how much richer than them this group were.
Those earning above £100,000 are Britain’s true elite: elite doctors, elite dentists, elite journalists, elite headmasters, elite civil servants, elite businesspeople; many of them with a diminishing notion of how most people in Britain live, and protected from scrutiny and comparison by our very British idea of privacy.
So here is my suggestion, which avoids the bureaucratic nonsense of a High Pay Unit, and replaces it with the greatest weapon for change in a democracy — transparency. It is that we adopt the Swedish system of making public all tax records. What we earn in pay and coffee futures, shares and land income, all to be there for all to see, from John Humphrys’s after-dinner speaking to my book royalties to the surgeon next door’s earnings from her private practice to the army sergeant’s pay. We’ll know what the Jones’s get and form a better notion of how rewards are distributed in modern Britain.
And not only will that be more useful than a High Pay Commission, it will be much, much more fun.

Customer probe: Blair bank targeted in £8.5bn FSA probe

By
Ben Laurance
Last updated at 11:00 PM on 10th August 2009

The bank where Tony Blair is an adviser is the target of an unprecedented probe involving billions of pounds of customers’ funds, the Daily Mail can disclose. JP Morgan Chase, whose chief executive Jamie Dimon last year recruited the former prime minister as an adviser, is being investigated by the City’s watchdog, the Financial Services Authority for allegedly failing to keep track of 8.5billion of clients’ money. The FSA has called in a top firm of accountants to examine the bank’s London activities after evidence emerged that JP Morgan had mixed customers’ funds with its own.
Under the spotlight: Tony Blair was recruited for his ‘advice and insight’ by Jamie Dimon, chief executive of JP Morgan Chase
Banks are meant to maintain a strict segregation of their own money from that which is held on behalf of clients. But JP Morgan managers in London discovered last month that client and bank money used for trading futures and options - a way of speculating on movements in currencies, share prices and commodities - had apparently been put into a single pool.

They raised the alarm and notified the FSA. The scale of case is unprecedented, say City insiders. The FSA has penalised small firms in the past for mixing funds owned by clients and the banks themselves. But this is thought to be the first case involving such a large household name. JP Morgan Chase faces the threat of an unlimited fine if the watchdog decides enforcement action is necessary. News of the FSA investigation will come as a huge embarrassment for the bank, which is valued on Wall Street at 100billion.
It is thought that the JP Morgan Chase problem dates back to late 2002. This followed the takeover of JP Morgan by Chase Manhattan two years earlier. Assets were not segregated to protect clients as FSA rules demand, insiders believe. When the issue first came to light last month and the FSA was told, the authority called in specialists from leading accountancy firm KPMG to investigate. The cost of the probe - known as a section 166 review - will be met by the bank. Sources say that KPMG’s team of investigators has been working at JP Morgan Chase’s offices on London Wall in the City, combing through records and e-mails and interviewing staff. Bank employees who were involved in handling client funds in 2002 as well as those still responsible have been questioned. The KPMG team has been asked to find out what checks, if any, were made to ensure that clients’ money has been kept safe and segregated. The accountants have also been asked to calculate if clients lost out because they were not paid any interest they might have been due. Senior figures at the bank could be reprimanded or even barred from working in the City if the FSA concludes that they were slack in setting up systems for separating customers’ funds. The accountants have been asked to deliver their preliminary findings to the FSA by the end of this month. A final report is due by the end of September. These reports will not be made public - unless the FSA subsequently decides that the bank should be punished. JP Morgan Chase has been regarded as one of the more robust of the banks to emerge from last year’s meltdown in the global financial system. Among the six largest U.S. banks, it is the only one to have stayed consistently in the black since the recession began in 2007. But it still took 15billion last year under the U.S. government’s programme to prop up the financial system. The money has since been repaid. Last month, the bank reported quarterly earnings of 1.64billion, which was a major factor in spurring the recovery in its shares and in Wall Street prices as a whole. A report last week showed that last year, the firm paid bonuses of 600,000 ($1m) or more to 1,626 employees. Of those, more than 200 received at least 1.8m. The top four earners received a total of nearly 45million between them. JP Morgan Chase said: ‘We have no comment.’ The FSA said: ‘We wouldn’t comment on whether we are doing an investigation.’ KPMG also declined to comment.

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Slump in housing floors carpet firm as chain goes into administration

By
Olinka Koster
Last updated at 12:03 AM on 18th July 2009

Hundreds of jobs were at risk last night after Allied Carpets went into administration.

The company is the latest household name to have been badly hit by
falling sales as the recession and slow housing market cut the number
of customers. The chain has 217 stores and is a familiar presence in shopping centres and out-of-town retail parks nationwide.

Feeling the pinch: Allied Carpets has gone into administration
But, like many retailers, it has suffered in recent months because of a downturn in spending, leaving up to 1,100 staff in danger of redundancy.
Administrators said Allied Carpet stores would continue to trade normally in the hope the business will be sold.
A lack of movement in the housing market means fewer people are decorating new homes.
At the same time, families are holding back from fitting new flooring and carpets in their current homes. Instead, they are paying for essentials or saving money in case of redundancy.

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Pension view ‘not radical enough’

The author of an influential report into the future of pensions now believes that his proposals were not radical enough.

Lord Turner told the BBC he would now argue that the age at which people received a state pension should be raised more quickly.

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Size matters

By Kevin Peachey
Consumer affairs reporter, BBC News, Maidstone, Kent

A message on the green signboard is the only clue that this vacant unit was recently a shoe shop. It suggests passing shoppers “love their feet”.

This podiatric love affair appears to have turned sour. A handwritten note on the door explains that the store - Sole Solution - has closed. Read more

Store woes

On the day MFI went into administration, it was hard to find customers outside its west London branch who were sorry to see it go.

It was a quiet afternoon at the Victoria retail park in Ruislip, west London, but a steady trickle of customers were willing to talk about their experiences with the troubled retailer. Read more

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