2009 – a nightmare year for anyone who relies on financial institutions, that’s all of us then. From a massive recession, to job cuts, increased PPI compensation claims and a collapsed housing market, it wasn’t exactly the best year the UK has seen.

But as they say, you’ve got to keep the past in mind to secure a better future, or something like that, so let’s take a look at the year from a financial viewpoint courtesy of Manchester Evening News and their story: ‘2009 – a year best forgotten‘.

At the beginning of 2009, the Financial Ombudsman Service (FOS) predicted roughly a 15 to 20% decrease in the amount of complaints being made to it about PPI. They believed that as banks started treating customers fairly and handling customer concerns, so less people would resort to contacting the FOS. They were wrong.

The banks are still failing to handle PPI claims and complaints properly and the latest figures show that in the first 9 months of 2009, the FOS received more complaints than the whole of 2008. In total the FOS will have received around 45,000 complaints by the end of the year, which far from being a decrease, is actually a 45% increase on last year.

At a time when cash is at a premium, it seems rediculous that premiums are taking more of your cash! 2009 has seen the average cost of Payment Protection Insurance (PPI) premiums rise by 35% due to high unemployment rates, increased crime and a need for the banks to make as much money as possible.

The decline of the economy meant that lenders were seeing less money coming in from investments and new mortgage or loan deals. As a result, providers have increased the cost of PPI to cope with the increased number of PPI claims being made. 35% is a massive hike and with no sign of the recession receeding, there could be further increases throughout 2010.

Want a monday morning stat to chew on? Get this: According to the National Audit Office: it cost the UK £850 billion to bail out the banks, which works out at £13,800 for every person in the country. Lets hope the banks are good for it.

One things the banks don’t seem to be good for is passing on the low interest rate to borrowers. Current rates are barely 1% lower than they were 2 years ago despite the 0.5% base rate. These massive bail out and the high interest rates are linked intrinsically because the banks are making money wherever they can try and pay back the £850billion.

Take borrowing for instance – it is more expensive to get an unsecured personal loan today than it was a year ago with the average rate at 10.3%, almost 10% more than the base rate. Compare this to the average 3.5% premium lenders were taking before the crash and we can see how the banks are aiming to pay HM Government back.

One stream of income that lenders and banks can no longer rely on is Payment Protection Insurance after the PPI compensation scandal and mis-sold policies. But this has only contributed to the hike in the cost of borrowing as the annual £3.7bn PPI profit disappears.

It’s not all doom and gloom for Payment Protection Insurance (PPI), general insurer Select & Protect has seen a large increase in sales of Mortgage Payment Protection Insurance (MPPI). This shows that there is still some faith in PPI, although mainly on mortgages as there’s a lot more to lose than with a missed credit card or unsecured loan repayment.

The boost in consumer faith is backed up by the compensation package arranged by the Financial Services Authority (FSA) which will see MPPI consumers receiving refunds totalling over £60 million. Multiple providers have agreed to the package that will involve the handing out of PPI compensation and the reinstatement of cover for those who’s policies have changed.

Payment Protection Insurance (PPI) has caused many people to spend hundreds and even thousands of pounds on cover that they either don’t know about, don’t want or can’t use. As a result, thousands of people have made PPI claims to get their money back and in some cases, they’ve used the power of the press to help them.

The lastest paper to help a PPI victim is the Independent, they helped one Barclaycard customer to get £864 back after the card provider continued to charge for PPI, 4 years after the customer became uneligable to claim. The Independent also helped the customer get back Interest in the form of a £50 goodwill payment. To read more, go here.

We talk a lot about how PPI has been grossly mis-sold by sales staff across the country and has led to thousands of PPI claims and disgruntled borrowers. But if you take away the human element, PPI is fundamentally a good idea.

The thing is, the recent increase in crime due to the recession and rising unemployment has seen a dramatic increase in premium costs. Loan, mortgage and credit card protection policies have all seen sharp rises across the board. Whatsmore, with unemployment predicted to peak at 3 million, premiums are expected to rise again as wage-less home owners need help to make repayments.

We’ve all heard about the shocking truth behind mis-sold PPI and how it’s cost individuals thousands of pounds and in some cases, their family home as well. But amidst all this terrible customer service and irresposibility from lenders and policy providers, there is the odd victory for joe public.

Check out this article in the Guardian about Julie and Barry, they avoided repossession (just) after the paper stepped in to sort their PPI company out. Who says the press just make trouble? Have a read…