If you’ve thought about making an unfair bank charges or mis sold PPI claim but not gotten round to it… pull your finger out. And if that hasn’t persuaded you, have a read of this letter from a Mortgage Strategy reader that shows lenders really don’t give a damn about their customers, take a look…

The Financial Services Authority (FSA) will be given new powers by the newly appointed secretary of state after the Financial Services Act received Royal Assent on 8th April. The Act won’t be exactly as proposed, with class action PPI claims and a few other elements being dropped to make sure it was passed into legislation before Parliament disolved for the general election.

The class action proposals would have enabled multiple consumers to join together and bring a case against banks, insurers and other financial institutions. The new Act will give the FSA some useful powers when dealing with PPI claim cases and under section 14, it will be able to draw up rules for a consumer redress scheme. This scheme will look to compensate consumers that have been affected by a ‘widespread or regular failure’ by relevant financial services firms. If a firm fails to comply with the regulator’s requirements and consumers have suffered (or might suffer) loss or damage as a result, then the FSA can implement punishments. Whether the regulator will stand up for the consumer and use it’s new powers, remains to be seen.

It was only a matter of time before we started to see payment protection insurance being used as a political football and Gordon Brown kicked off today with a pledge to clampdown on banking rip-offs and mis selling. Of course Brown is referencing the completely unfair bank charges and mis sold PPI policies that have been uncovered in the banking industry over the last 4 years.

Labour has said it wants fairer charges but the Lib Dems have gone one step further and are campaigning for victims of past fees to be refunded despite the Court decision in November. Whether the Tories will chip in is to be revealed tomorrow, when they announce their manifesto.

Borrowing money has never been more expensive, according to research done by Moneysupermarket. They’ve uncovered a 130% rise in small loan interest rates over the last 4 years, taking the average interest rate of a £3000 loan from 6.49% up to 14.92%. In fact all loans under £5000 have risen sharply in cost while larger loans have remained competitive, the reason for the hikes has been in part attributed to mis sold PPI and the FSA ban on PPI sales alongside loans.

Head of loans and debt at Moneysupermarket, Tim Moss, said: “Following the Financial Services Authority’s decision last year to ban providers from selling single premium payment protection insurance on unsecured loans we knew the lenders would seek other ways of clawing back their profit.”

When it comes to making the banks pay, no one has truly made any effective inroads. Sure all the PPI compensation claims and bank charges refunds have hit them hard, but it’s just a drop in the ocean. The Financial Services Authority (FSA) haven’t done much to protect the consumer and by letting the banks regulate themselves, we’ve ended up with a duff economy.

But, we must all fight for a fair deal and the Financial Services Compensation Scheme (FSCS) has made the latest move, saying that financial advisers must pay an £80 million interim levy to help pay back mis-sold customers. The £80m is part of the general levy against financial product providers for 2010/11, which amounts to £148 million.

For those who care: at the height of PPI, the banks were making around £148million every 14 days from policy sales, so it’s doubtful whether the FSCS levy is going to trouble them much.

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.