We’ve all heard about the dark side of payment protection insurance (PPI), the mis selling, the irresponsibility, the inappropriate cover, the high costs. But here at BankCharges.com, we maintain that PPI is not an ‘evil’ product, the recent problems came through human error and greed, PPI is in itself, a good product and always worth considering.

This has been shown in an Independent article that talks about the story of Bronwen Jenkins and how a forgotten about policy that saved her life. Check it out..

Massive PPI claims related news: one of the UK’s largest claims management companies has been shut down my the Ministry of Justice (MOJ). Cartel Client Review has felt wrath of the MOJ after an investigation started in February found that customer complaints about owed money were true.

Only last week, Cartel’s associated firm of solicitors, CCLS, was also shut down, this time by the Solicitors Regulation Authority (SRA). The firm charged £495 to look though peoples loan agreements and made £20m in just over two years but refused on a number of occasions to refund people who had no case. As a result, hundreds of people complained to the authorities and to media organisations such as the BBC that after paying fees they had heard nothing back for up to two years.

With consumer loans in short supply and credit card providers being more picky about who they give plastic to, over 1 million consumers have resorted to sub prime credit card interest rates of 60%. We are, of course, talking about the Vanquis credit card and it’s backers, Provident Financial, are currently receiving around 2,700 applications a day for the high maintenence flexible friend.

This card is aimed squarely at borrowers who have a bad credit history but with few providers coughing up the cash at the moment, many middle-class families are also choosing this credit route. No surprise really if you consider that in the last 12 months, UK consumer credit card debt has risen by 15% to £61.5billion.

Yesterday we posted about the self regulation of the banks and how sales people selling Payment Protection Insurance products need no official qualification from the Financial Services Authority (FSA). All they have is the training provided to them by their employer, the bank. Little wonder then, that there has been so much PPI mis-selling as there is only a day or two’s training between a lay person and a trained sales person.

And this mis sold PPI is likely to cost the banks dearly, last week, the FSA released figures estimating the cost of the PPI compensation bill to customers, are you ready?.. Between £1 billion and £3 billion for those who have not yet complained and a further £700 million to £1.2 billion for those who have. I think you know what to do next.

You’d think that selling costly and complex financial products to complete lay persons would demand some kind of qualication wouldn’t you? Well, it’s no wonder there are so many PPI claims because it doesn’t – currently, the Financial Services Authority (FSA) does not require that a sales person has any particular qualification to do with the sale of pure protection products.

Instead of having a qualification programme that all must have completed, it is up to the firm to ensure that it has training and in place that is adequate for the insurance products in it’s portfolio. So, as usual, the FSA is letting the banks self manage and self regulate, which is how we all got in the mess we’re in now. More on this tomorrow.

The banks are nobody’s friend at the moment, with over charging, mis sold PPI and sky high interest rates, not to mention the recession, the majority of UK banking consumers would love another way to get credit. And it looks like one website has really tuned into this discomfort with the introduction of person to person lending.

Zopa.com is a service that allows users to arrange a person-to-person loan from £10 to £25,000 and it’s proving very popular. Over the last 12 months lending has doubled to £36.4m as borrowers look for a better rate and lenders look for a higher retuen than a savings account. Fascinating.

If you bank with HSBC in Switzerland, you might want to ring you relationship manager and check all’s well because it emerged this week that personal details of an estimated 24,000 clients of HSBC Private Bank in Switzerland have been stolen. According to an FSA investigation, the data theft occured three years ago but HSBC only learnt about the incident in December 2008.

The bank reacted by spending over £60million on improving the security systems but by then, what the FSA calls “large amounts of unencrypted customer details” had been taken from the systems and posted to third parties. HSBC has said the stolen data is “highly likely” to include information about British customers.

Believe it or not, there’s a financial time bomb ticking away in UK, and if it goes off: hundreds of thousands of individuals stand to lose everything because of the culmination of a number of factors. We’re talking about attempts to stay afloat and keep the wolf from the door but these attempts could well bring the wolf in, sit him down and offer him afternoon tea. Have a read of this to find out more…

Bit of a stat-tastic post today all about lending in January 2010 and the whole of 2009, courtesy of recently released figures from the Bank of England. Check these beauties out:

- 48,198 mortgages were approved in January ‘10, – 17% lower than the 58,223 in December ‘09 but a whopping 43% higher than in January ‘09.

For a bit of context, researchers Global Insight believe 70,000 to 80,000 home loan approvals a month means ’stable house prices’ and experts attributed slow Jan ‘10 sales to poor weather (yes you read right) and the return of the Government stamp duty threshold to £125,000.

- **RECORD BREAKER** – UK banks wrote off a previously unheard of £4.12billion in bad credit card debt in 2009.

- £984million of mortgages were written off in 2009, double the £408million in 2008.

- In total the amount written off by banks (including cards, mortgages and other loans) rose from £6.9billion to £9.3billion.

- Total lending dropped from £13.53 billion in December to £10.24 billion in January.

- UK citizens borrowed £500million more than they repaid in January, a rare occurance with the populus having repaid more that we’d borrowed for five of the previous six months. An interesting comparison is that at £500million borrowed, the amount of credit being handed out in one month is still a long way from the £2billion a month during the peak of the recent boom time.