Category: Finance

Banks Are On Full Alert Regarding Crowdfunding

Kickstarter’s plethora of investors surfing the Internet can be business leaders or just that guy in his bedroom watching series online and ends up stumbling upon a compelling idea. Alongside Venture Capitalists, private investors are now armchair investors who lend or even stake their own money to get an item they could rarely have, or something they really prefer.

Angel investors are wary of the new revolution surrounding global finance, namely crowdfunding.

They said the Internet had transformed the way people communicate and interact. The fast dissemination of information, coupled with easier access to monetary accounts, has allowed anybody who owns a smartphone or mobile device to participate in lending or taking equity. Scales are smaller and identity proofs through clients make investing seamless compared to the stock market.

Investors are looking at social networks and Internet services replacing banking systems. Bitcoin’s blockchain transcription allows for anonymous transactions and faster monetary transfer. Social networks have millions of consumers wherein they could create their own financial systems and abandon banks all together.

All these new financial possibilities and investing could pave the way for a new generation of investors who could just surf the internet, invest where they want and grow their money without as much of a hassle unlike before.


Financial Services Compensation Scheme Chief Director Mark Neale said PPI claims are likely to continue in the next few years. The FSCS, which currently handles tens of thousands of PPI complaints, is likely to increase its handle of complaints by 20% this year.

Claims for PPI compensation, continued to pour in between September and July, scuppering banks’ expectations the rate of grievances would abate considerably through the 2nd half. Lloyds, which was the first of the big four banks to report third quarter results on last Tuesday, had by far the largest share of the PPI market, has now allocated a total of £11.3bn for settlement. The sizeable new top-ups may revive calls to impose a deadline on PPI claims, which will call for a time limit on consumers to submit settlement claims.

PPI has greatly reduced the banking industry’s profits. The possibility of involvement the UK big four could have in the Libor and Euribor scandals greatly harms their public image and consumer confidence towards them could fall. People claiming a PPI refund back from Barclays may have lowered in number, but Barclays is not outplaying the possibility that one of their employees could possibly be involved in the Libor scandal.

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A High Possibility that PPI Complaints Will Continue in the Next Few Years

Financial Services Compensation Scheme Chief Director Mark Neale said PPI claims are likely to continue in the next few years. The FSCS, which currently handles tens of thousands of PPI complaints, is likely to increase its handle of complaints by 20% this year.

Neale said that the UK have not yet seen the peak of PPI claims as more people continue to claim PPI refunds from banks and lending companies. He also said that despite the £20 billion set aside for PPI and the £13.3 billion pay-out to consumers, more consumers have not yet made their PPI complaints.

He added that he cannot ensure the height of the PPI peak is, or the length of time before PPI dies down. Despite the Financial Ombudsman announcing a decrease in the numbers of PPI complaints this year, the numbers in the FSCS have yet to drop.

The FSCS helps consumers to get back refunds from insolvent and bankrupt companies.

Lloyds is currently the biggest contributor to mis sold PPI with £13 billion set aside for PPI complaints. The Lloyds banking group is currently looking to reduce the amount of bonuses of former CEO Eric Daniels and current CEO Antonio Horta-Osorio.

UK Banking Industry Losing More to Mis Sold PPI, Other Scandals

Lloyds recently announced that it will be providing an additional £750 million to its total PPI bill after announcing its third quarter financial results. Along with Lloyds, HSBC and RBS are also adding millions more to their respective PPI bills. So far, Lloyds has lost a total of £8 billion, almost accounting for half of the current total of £17 billion today.

According to experts, the UK banking industry could possibly lose more than £20 billion to mis sold PPI in the second to third quarter of 2013. They said that the number of PPI complaints is not falling in number. An evidence of such is the Financial Ombudsman receiving its one-millionth complaint in the third quarter of this year.

PPI has greatly reduced the banking industry’s profits. The possibility of involvement the UK big four could have in the Libor and Euribor scandals greatly harms their public image and consumer confidence towards them could fall. People claiming a PPI refund back from Barclays may have lowered in number, but Barclays is not outplaying the possibility that one of their employees could possibly be involved in the Libor scandal.

To date, PPI is the biggest and the most expensive financial scandal in the United Kingdom. According to the FOS, PPI mis selling began ten to fifteen years ago as people took out financing for properties and other investments from bank employees focused on increasing work volume for high commission.

Big Loss for Lloyds as bill for PPI claims increased to £6.8 Billion

Lloyds Banking group is one of the biggest banking groups in the United Kingdom. It was known to many that the bank has suffered a lot from the Payment Protection Insurance compensation claims (PPI Claims). The current PPI scandal that the bank is facing has forced the bank to allot £3.6 Billion intended for PPI compensation payouts to the banks customers. The bank is known to be providing a lot of financial services in the UK. Lloyds is already expecting an increase of £6.8 Billion from the PPI claims alone. Big sum of amount was used by the bank to compensate the customers who were victims of mis-selling; this includes the £400million for compensation payments given to victims due to an interest rate mis-selling to small business.

As for the trading, the banks’ sales decreased by 3.76 percent and the decreased were coming from the bank’s biggest problem on compensation claims. The huge percentage of the bank’s loss was largely affected by the PPI claims scandal. Up until now the bank is on red alert, trying to figure out how to solve the ongoing issue of PPI mis-selling and compensation claims.

Meanwhile, amidst the problem the bank was facing, their CEO, Antonio Horta Osorio has earned an award amounting to a £1.5million shares bonus even if the bank’s profit fell drastically. Even the employees of the bank will earn their bonus of £3,900, although it was reported that the bonuses has dropped by 3% since 2011. Having continuous problem with PPI compensation claims, the bank still has improvements in some of its business. The bank has developed lending to small business and was able to help a number of fifty-five customers to own a home.

British Banks Found Guilty Again

First it was the Credit Crunch, then the mis-selling of PPI and now, the British Bankers’ rap sheet gets longer.  And this time they may have to pick up a £10bn bill.

The Financial Service Authority found that 10 banks had been selling small businesses complex loan deals that would eventually cost them a fortune.  The banks sold small businesses loans that came with interest rate swaps that would protect them from any increases in interest rates. However, however many were not told that if interest rates where to fall like they did, the businesses would have to pay a fortune to get out of the mess.

In the cases the Financial Service Authority has reviewed so far, 90% of loans with interest rate swaps were sold by Barclays, HSBC and the two bailed out banks Lloyds and the Royal Bank of Scotland. Six other big banks also face a thunder storm of compensation cases involving interest rate swaps include the self-professed ethical bank, The Co-operative.

Up to 36,000 businesses may now receive compensation because of the scandal. With the average claim reaching £300,000, the banks may have to pay out a whopping £10bn in compensation for interest rate swap mis-selling.

Furious Watchdogs, Lawyers and MPs ripped into the banks, which have already been found guilty of fiddling Libor interest rates and mis-selling Payment Protection Insurance (PPI).  Anthony Thomson, ex-boss of start-up bank Metro, said those found guilty should be JAILED. He added:  “This isn’t a victimless, anonymous crime. Those responsible should pay the price.”

The Financial Services Authority consumer Chief Martin Wheatley commented:  “The most complex of these products were completely unsuitable. You’re talking about hairdressers, fish-and-chip shops, bed-and-breakfast businesses. They were exploited. They could not possibly have understood the products they were sold.”

All the chief executives of the ‘Big Four’ banks during the mis-selling have since left, just in time to dodge another bullet, the mis-selling of interest rate swap packages.  Barclays, one of the big perpetrators has so far set aside £450million to be paid

The Financial Service Authority’s review of another six banks; Clydesdale, Yorkshire, Santander, the Co-op, Bank Of Ireland and Allied Irish Bank, will be made public sometime in February.

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Banks Face More Than £16 Billion in Compensation Claims

Analysts state that banks will need more than £13 billion to cope up with the entire UK PPI crisis. With the Financial Ombudsman going over 1,500 claims on a daily basis and having reached its 500,000th claim, banks will need to swallow the consequences.

The entire UK PPI bill is at £13 billion, with Lloyds leading with £4.3 billion in total. Barclays came next with £2 billion. HSBC, RBS and Santander each have £1.1, £1.3 and £500 million respectively.

The third quarter report indicates that Barclays will need more than the £700 million it had promised to set aside additionally with its £2 billion PPI bill. Lloyds is also facing an additional £2.3 billion for PPI compensation. In total, analysts state that a compensation cost of £16 billion should see the PPI crisis by the end during the year 2016.

The FOS mentioned that banks continually slow down the PPI claims process by delaying and hassling their customers. Against the effect, the FOS has proposed a no-claim payout for customers mis sold PPI in the future. This means that customers can be compensated without making a claim by regulators who would work with banks to internally sort out affairs.

The Financial Services Authority also proposes the Financial Conduct Authority to revamp the banking incentives system believed to breed “Bonus Chasers” who use unfair sales methods to sell PPI to customers who are obviously inelgible for it.

PPI Claims: Banking Reforms to Proceed Accordingly – Wheatley

Martin Wheatley, the managing director of the Financial Services Authority (FSA) stated in his speech that banking reforms may be required to further minimize events similar to PPI mis selling in the future. The FSA has investigated and discovered that the bank incentives system of many banks nowadays has become the motivation of many brokers and financial advisers into advising PPI as a crucial part of every customer’s financial needs.

Mis sold payment protection insurance claims peaked at 2.2 million from January to June, making it the biggest financial scandal in the United Kingdom. Among high street banks listed with high claims numbers are Barclays with 19,000 and Lloyds with 22,000, both estimates from the Financial Services Authority.

Both banks, along with HSBC, RBS and Santander, have put aside a £9 million compensation package for the United Kingdom. Half of the amount has been distributed to customers.

The Financial Ombudsman Service (FOS), an independent consumer-government relations organization, states that they are receiving 1,500 claims a day for mis sold PPI claims. They also state that some banks continue to reject claims from customers which they should be honoring.

Payment Protection Insurance is an insurance policy designed to protect customer loans, mortgages and credit cards. It is often sold alongside these products as a “bonus” product that is free for one year and paid by the customer in the following years, or prescribed by financial advisers.

Statistics of claims in the FOS state that the highest number of complaints were received from the advisory of brokers and financial advisers in purchasing PPI. This prompted the FSA to conduct investigations in the incentives systems of banks pending its reform.

Using A PPI Claims Form Will Help You Reclaim Your Money

If you have been covered under some other policy, it might be a little difficult for you to claim for the PPI. The policy has been made to help the people when they will suffer from any kind of mishap-whether it be illness or a sudden accident.

But sometimes people have been mis sold PPI and this leads to great them using a PPI claim form to regain their cash. It is due to this mi selling that many people have been affected by the policy. So you must be careful before investing in a financial company. You must read all the terms and conditions before applying for the PPI Claims.

But in the recent years there have been a lot of controversy regarding the mis selling of the PPI claim Policies. You must also check out the authenticity of the company as it is one of the most essential things before investing in a company. But you must know that making a claim is not a compulsory one. There are various ways in which mi selling occurs and one of the most frequent  one is if you have been covered under some other policy, you can never go for the PPI Policy.

If you have any doubt regarding any of the terms of the policy, you must clarify it from your financial advisor. In fact the advisor should be a professional one who has solved such problem earlier. He must have experience in the field and that will help you to claim for the money which has been mis sold.

Why Mis sold PPI Is Becoming Unpopular

You may be aware that people who have purchased payment protection insurance reluctantly now frequently Reclaim PPI from their lenders. Maintaining a missold policy is not simple and you need to pay a lot of amount for this cover. In the UK alone the Payment Protection Claims have crossed even millions in numbers. According to a recent study, more than 90% of total sold PPI policies are missold.

Millions of mis sold PPI policyholders are now vital threat to the UK economy at this present juncture. Consumers have paid millions of dollars on these counterfeit policies. Moreover, people have not managed to attain any prospective outcome by means of the mis sold PPI claims. Factors like misselling, inadequacy of cover period and extremely high premiums have made PPI unpopular to the prospective consumers.

PPI however is not a worthless insurance cover. The value of this insurance came vivid at the time of recession when thousands of people utilized this cover for recompensing their outstanding arrears. Issues with these policies became prominent when the mis selling started. Lenders have sold at least 20 million mis sold PPI policies till now and as said above 90% of them are mis sold.

Mis sold PPI can appear as a burden to anyone as this cover is pretty expensive. Besides, most PPI covers do not provide their clients with adequate cover. One can repay his or her outstanding only for a year by means of PPI. Thus, it remains useless. People are disappointed with this financial product for these reasons altogether.