The British Bankers’ Association, which fought the case, said it would not appeal after losing a court challenge against new rules on mis-selling.

Barclays said it had set aside £1bn to pay compensation, and HSBC £269m, while RBS added £850m to the £200m it had already paid or provided for.

Last month, Lloyds Banking Group made a £3.2bn provision for possible claims.

Peter Vicary-Smith of the consumers’ association Which? said the banks had now seen sense.
“It was a colossal error of judgment by the BBA to have brought this case in the first place, which has even further diminished the banking industry’s reputation in the eyes of consumers,” he said.
“PPI was mis-sold and complaints about it mishandled on an industrial scale for well over a decade.

The story so far

• PPI is supposed to cover loan repayments if someone falls ill or loses their job
• Some policies were mis-sold, leading to compensation payments
• The banks were told by the City watchdog to re-examine previous sales, even if complaints had been rejected or never lodged
• This led to a court battle, which the banks have lost
• When the case was ongoing, many new complaints were put on hold, but will now be processed

“There could still be huge numbers of people out there who were duped into buying PPI and unaware they can make a claim,” Mr Vicary-Smith added.

Mis-sold PPI

The banks’ decisions mean that several million people may now be eligible for a compensation payment.
PPI policies are supposed to cover loan repayments if someone falls ill, has an accident or loses their job.

But 16 million have been sold since 2005 alone and many are thought to have been mis-sold.
In some cases they were sold to self-employed people who would not have been able to claim, to borrowers who were wrongly told that taking PPI was a condition for being granted their loan, and even to consumers who did not realise they were taking out a policy.

Last month the High Court ruled that the banks had to obey the new rules of the Financial Services Authority (FSA), which require them to go back over all their past sales to see if the customers have a claim for mis-selling.

‘Important step’

In a statement the BBA said: “In the interest of providing certainty for their customers, the banks and the British Bankers’ Association have decided that they do not intend to appeal.”

“The entire episode is an embarrassment for our High Street banks – it is now time to wipe the slate clean, pay up and look to learn lessons for the future

“Refunding billions of pounds to millions of people will be a mammoth undertaking and to get it wrong would add insult to injury.”

‘We apologise’

Barclays’ chief executive Bob Diamond said the bank would now begin the process of compensating customers.

The big banks should have been more mindful of… paying due regard to the interests of customers and treating them fairly.

“We don’t always get things right: when we get them wrong, we apologise and put them right.

“We have taken this decision because it is in the best interests of our customers, as well as for Barclays and its shareholders,” Mr Diamond said.

The Financial Ombudsman Service (FOS) welcomed the banks’ decision to deal with the mis-selling.

“Consumers should come to us at the ombudsman if they’re unsure about what to do next,” said chief ombudsman Natalie Ceeney.

“Meanwhile we will be working with the banks, over the coming weeks, to ensure that consumers’ complaints are dealt with fairly and promptly.”

Better record

One leading mortgage lender, the Nationwide building society, distanced itself from the banks that tried to challenge the FSA.

It said it had continued to process new PPI complaints while the High Court case was being heard.
It pointed out it expected to pay only £10m in compensation and had a much better record of dealing with such complaints.

“Looking at the FOS complaints league table (for the second half of 2010) the society is ranked 102 out of 106 firms based on fewer than 650 complaints,” said a spokesman for the society.

“Thirteen per cent of the society’s complaints were upheld by FOS in favour of the customer, compared to an industry average of 63%.”

FSA scrutiny

The FSA has previously estimated that the banks will have to pay up to £4.5bn to settle tens of thousands of claims.

That now appears to be an underestimate.

The regulator requires the banks and other PPI sellers to look at all past sales and, if there is any evidence of “systemic” mis-selling, to write to the affected groups of customers and invite them to make a claim.

This means that not all past customers will be contacted directly, as not all policies were mis-sold in the first place.

However, any customer who has a concern is encouraged to lodge a complaint first rather than wait for the bank to take the initiative.

An FSA spokesman explained that the regulator employs teams of supervisors for each individual institution, and also has a special team looking at just the PPI problem, which would ensure that the banks and other sellers of PPI did not dodge their responsibilities.

Although the FSA can only enforce its rules on sales made after January 2005, when it took over regulation of PPI sales, customers can still complain to a bank about sales before then.

If you have a PPI Claim visit www.yourppiclaims.co.uk

The latest figures represent the fastest drop in household savings and disposable income since the Index began in early 2009. August figures are as low as 33.2 – where results below 50 means finances are getting worse.

That means the amount of money people have available to spend is falling at the fastest rate since the research began. The Index also suggests that debt rose the most we’ve seen in nine months – and total debt increased for the fifth month in a row.

There are a number of factors that are having an effect on family finances. Take-home pay is not matching the rise in inflation – the consumer price index (a measure of inflation) is expected to reach 5% by the end of the year (it was 4.4% in July).

High unemployment and rising levels of debt are also having an impact on family budgets.

The knock-on effect of this is that people have less money available for savings and spending, which could affect the economic recovery in the UK.

Tim Moore, a senior economist at Markit warned: “Consumer spending (accounts) for around two thirds of UK gross domestic product… this does not bode well for the economy in the second half of the year.”

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These days most people have more than one credit card, store cards and other loan debts (such as auto loans and medical bills) and therefore have to make multiple payments each month to various lenders.

Debt consolidation is a process where a single loan is obtained to pay off all of your existing loans meaning that you have only one payment to make each month that is usually lower than the combined payments of your existing loans.

Sounds good right? Well yes and no. There are numerous plans available and not all of them will suit your needs. Also here at the debt consolidation blog we will examine the pro’s and con’s of debt consolidation and even recommend other ways to control your debt.

A lot of firms that offer these loans often employ debt consolidation experts who are professionally trained to analyze your finances and will often negotiate a payment plan with your creditors and get late fees and penalties waived on your behalf.

Then they will recommend a loan amount and term of repayment to suit your budget.

What Are The Benefits Of Debt Consolidation?

With credit card debt, the amount that you owe soon becomes considerably more than what you initially borrowed due to steep interest rates and any late payment penalties.
A good debt consolidation program will wipe out these interest payments and penalties meaning that you only need to pay back the borrowed amount.

Payments are consolidated into one manageable payment each month.

Reduction of overall interest payments are usually achieved. With credit card interest as high as 18% it is very likely that your debt consolidation loan interest rate will be considerably lower than this.

The most important benefit and certainly the one that the debt consolidation will always recommend that you strive for is to become debt free sooner. Many people have achieved this and you can too.

Benefits of a CVA

• Can quickly improve company cashflow
• Stops pressure from creditors including HM Revenue & Customs and covers all tax arrears
• Can be implemented quickly even if a winding up petition has been issued
• Not advertised locally or in the Gazette
• Directors and shareholders retain supervised control of the company
• No requirement to report to the Insolvency Service on the conduct of directors
• Significantly lower costs than Administration or Compulsory Liquidation

Debt Problems UK will conduct a full review of the company’s cashflow and restructure the monthly payments to establish the amount affordable and the period over which it is to be paid (usually 60 months).

CVA’s provide a higher return to creditors than the alternative of Compulsory Liquidation due to the huge saving in associated costs and are therefore are widely recognised across the industry. HM Revenue & Customs have a department set up solely to consider proposed CVA’s and providing it can be shown the Company can trade at a profit they are more than happy to consider the offer on the basis they will get a much better return. They are often willing to put any enforcement action on hold that may be in progress.

We will assist you every step of the way in restructuring the Company to ensure it is profitable and draw up the company proposal.
Once the proposal is agreed by creditors they cannot demand any changes to the proposal and providing the company maintains the agreed payments it will be debt free within the agreed time scale.

Advantages of a CVA

Your Commitment In An CVA

• The company will need to work in line with the predicted cash flow forecast for the term of the CVA.
• You will agree not to take any further credit for the duration of the CVA.
• Any additional company profits will be made available to your creditors.

The CVA Process

Once it has been agreed that a CVA is the best debt solution for your company the following process will be carried out:

• You will be asked to provide documentation which confirms the company’s cash flow and details of all company assets and liabilities.
• Once this is received we will draft a CVA proposal on your behalf.
• Once the proposal is signed it is circulated to your creditors and a date for the meeting of creditors and shareholders is set.
• The meeting of creditors will be held and your creditors will vote on acceptance of your proposal.
• After the meeting has been passed the monthly payments will commence.
• Once all the payments have been made and the terms of the arrangement are met you company will be debt free.

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At an equivalent cost of just 60p a meal per person, the daily planner lists breakfast, lunch and dinner.

Sainsbury’s said the £50 a week initiative will help families avoid making impulse buys and cut down on waste food, which it claims costs the average family £680 a year.

With household budgets strained, it could be a welcome boost to families trying to keep a handle on their day-to-day outgoings.

The menu ensures at least five portions of fruit or vegetables a day and all ingredients meet quality standards, including Fairtrade bananas, British chicken, free range eggs and pole and line caught tuna.

Today’s family meal, for example, is cereal and banana for breakfast, a BLT for lunch and cottage pie (with a vegetable mash topping) for dinner – a total cost of £8.46.

“We know the weekly shop is one of the family’s biggest regular expenses and we are really pleased that we can help to make it easier, and more cost effective,” said Claire Harrison-Church, director of brand communications at Sainsbury’s.

‘We’ve chosen simple, everyday items that make a healthy, tasty and nutritionally balanced seven day menu for four for just £50.”

Despite the impact of the recession on the property sector, rental costs in the UK have increased steadily over the last two years, according to Endsleigh.

The average cost in the UK has risen by four per cent since 2009, which is higher than the national inflation rate.

London has been named the most expensive area to rent in, costing double the average UK rental prices, while Scotland was found to be the cheapest area for tenants at an average of £299 per month.

“The increase in cost of renting across the UK shows that despite the recession the lettings market has remained strong, which is great news for landlords and letting agents,” claimed Carlos Thompson, Endsleigh’s head of business development.

“Tenants on the other hand may be disconcerted by this news,” he added.

A recent study by HSBC suggested that as Britons find it more difficult to make their first step onto the property ladder, many people will remain in rented accommodation for longer than ever before.

Every month, it publishes its `Lending to Individuals` statistics, showing us how much debt people took on or repaid in the previous month.

It breaks those figures down into debt that`s secured on dwellings and `consumer credit` (unsecured debt, such as credit card debt and unsecured loans).

The latest figures, published two days ago, show that the overall amount of debt actually rose by £1.3bn in May, as people borrowed more than they repaid.

Of that increase, the majority – £1.1bn – was secured against property.

The other £200m was unsecured debt.

“You hear a lot about people`s problem obtaining credit these days, but `supply` (availability) is only part of the story – there`s also `demand` (how much people are actually looking for credit).

“These days, many people are quite simply determined to reduce their debt levels: paying back what they owe and trying not to borrow more. This is a sensible approach to debt – especially at a time like this, with all the economic uncertainty we`re seeing.”

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The Accountant in Bankruptcy (AiB), Scotland`s Insolvency Service, has just published its latest figures, showing us how many people entered insolvency to tackle their debts between April and June this year.

In all, there were 5,319 personal insolvencies in Scotland. Although this was a 25% increase on the number seen in the previous quarter, it also marked a 1% decrease on the same time period a year ago.

The personal insolvency figures tell us how many people entered bankruptcy or a Protected Trust Deed (generally regarded as the Scottish equivalent of an IVA – Individual Voluntary Arrangement).

The AiB also provides figures about DAS, the Debt Management Scheme, which can give struggling Scottish borrowers access to a form of statutory debt management.

In all, there were 2,947 bankruptcies – an increase of 10% on the previous quarter but a decrease of 6% on the same time period last year. 2,459 of them were the result of debtor applications (where people apply to have themselves made bankrupt, as opposed to their lenders doing it).

• 1,305 of these were awarded through LILA, the Low Income, Low Asset route into bankruptcy, which was introduced in April 2008.
• 759 people entered bankruptcy through the Certificate route into bankruptcy, which was introduced in November last year.

As for Trust Deeds, there were 2,372 new cases in the three-month period. Again, this was a significant increase (51%) on the previous quarter – but in this case, it was also an increase (of 6%) on the same period last year.

Finally, 643 new Debt Payment Programmes were approved under DAS. This was an increase of 35% on the first three months of 2011 – and an increase of 30% on the same time last year.

Fergus Ewing, who`s the Minister with responsibility for personal insolvency and debt management in Scotland, commented on the increase in DAS cases:

“AiB`s work to raise awareness of the Debt Arrangement Scheme and its benefits – such as the freezing of interest and charges for debtors and at least a 90 per cent return for creditors – has been reflected in the increase in take-up of the Scheme. With more people now accessing DAS, figures suggest it is offering a sensible option to Scots struggling with debt who have sought advice early on. With the changes introduced on 1 July, I fully expect to see continued growth in DAS in coming months.”

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A total of 9,000 properties were taken over by lenders in the UK during the three months to the end of June, compared to 9,100 in the first quarter of the year, according to the Council of Mortgage Lenders.

The fall is due to the relatively stable job market, record low interest rates of 0.5% and a willingness by banks to show leniency to people struggling to meet their mortgage payments, it said.

But the group has stuck to its prediction that a total of 40,000 people will lose their homes this year, up from 36,300 in 2010, due to the squeeze on household incomes as a result of the combination of rising taxes and living costs and slow wage growth.

Home repossessions rose by 15% in the first quarter of the year, the first increase since the autumn of 2009, and are set to continue to rise later this year and in 2012, when repossessions are expected to hit 45,000.

Chris Gardner, director of independent mortgage broker Obligo.co.uk, warned that an “arrears time-bomb” will be detonated when interest rates rise and even more people will be unable to keep up with their repayments.

He said: “Lenders’ forbearance cannot last for ever – and if they change their approach, the rug will quickly be pulled from under many late payers, leading to thousands more repossessions.”

Home owners struggling to meet payments are expected to have a year or two before interest rates rise.

The Bank of England slashed the UK’s economic growth forecast for the next two years yesterday, suggesting that the economy will be too weak to withstand a rise.

The Council of Mortgage Lenders’ (CML) latest figures reveal a slight rise in the number of homes that have slipped a small way into arrears on their payments, up to 78,500 from 77,800.

There are a predicted number of 40,000 house repossessions in the UK this year

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