The Financial Services Authority (FSA) has threatened to fine two of the UK’s biggest banks for failing to handle customer complaints correctly. An investigation by the City regulator has discovered that both RBS and Lloyds haven’t been processing complaints and PPI claims properly.

In some cases, the FSA found that staff were actually incentivised to not deal with complaints properly and not pay any compensation. Yes, you read that right. Incentivised to shaft customers, disgusting. Take this chap for example:

Anyone looking for credit at them moment is probably facing a brick wall as lenders increase interest rates to make up for mis sold PPI losses and only lend to high credit scores and existing customers. This is no more evident than in the credit card industry where providers are handpicking borrowers and offering only the most credit-worthy the attractive advertised rates.

This policy leaves many applicants with an interest rate way above the one they wanted but credit card providers can get away with it because by law; they must offer the advertised rate to only 66% of all those who apply. Credit cards are not likely to ever be as attractive a proposition as they have been and until the banks figure out another way to screw money from borrowers without the FSA doing anything, we’ll all just have to work on our credit ratings. No bad thing.

Getting a payout from a payment protection insurance policy is nigh-on impossible, thanks to useless and worthless mis sold PPI, but it ain’t the only chocolate teapot of an insurance product available on the market today. There’s also Travel Insurance, which provides ‘peace of mind’ to millions of holiday makers and business travellers every year. But when that unpronounceable volcanoe in Iceland erupted and left British citizens stranded* across the globe, that ‘peace of mind’ was tested and found to have many cracks and imperfections.

A great many insurers left holiday-makers and business travellers in the lurch, bailing out and leaving them out of pocket. Like any villainous activity, there is a few goodies in this story, namely HSBC and M&S Money who paid out in full to those making a claim. Now, claim for claim, travel insurance is nowhere near as bad a payment protection and it costs a lot less too, but remember if you’re an EU citizen travelling in Europe, you have EHIC cover as standard and home insurance can often include items lost when away.

*for stranded read: extra holiday time in a desired location or more nights in a hotel on the Company, not exactly clinging to a piece of drifting wood in the mid-atlantic.

The bank receives 1600 complaints from customers EVERY day

Figures released by the bank itself have revealed that RBS receives over 1,600 complaints every day, and that’s just between July and December last year. Over that period, RBS received 80,212 complaints with its high street subsidiary Natwest receiving 222,159. Most of the complaints are thought to be about mis sold PPI, unfair bank charges appeals and current accounts.

To give some credit to RBS (as if I haven’t given enough already) they are said to be the first bank to provide more detailed data to the public. Data that is so forthright that it even showed the bank admitting to making a mistake in eight out of ten customer complaints.

We’re not all PPI, PPI, PPI here at the blog, infact if it’s finance related, makes good sense or good news for you, then we’ll write about it. We often discuss mis sold PPI and how it’s affecting around 2 million policies in the UK, but insurance isn’t the only trap-door to look out for when borrowing.

There are plenty of ways that the banks can make more money from you without you realising. So to help you navigate the unchartered waters surrounding ‘credit island’, LoveMoney have put together a top 10 list of things to avoid when taking out a loan. Take a look…

Following on from yesterday’s intro to the Future of Banking Commission (FBC) and their meeting over the next few weeks about financial reform, here’s a little more about who they are and what their focus is.

Mis-selling is at the centre of the Commission’s work and Which? surveys have justified this with 25% of respondents saying their major point of reform would be to stop banks selling them products that they don’t want or need. The thing is, the FBC may just have the clout to make a difference and affect change. Not only are there MP’s involved and Which? but also other consumer supporters such as the Financial Mail who have themselves exposed hundreds of cases of both missold PPI and unscupulous banking.

The report produced by the Commission will be based on a number of information sources including interviews with Lord Turner, chairman of the Financial Services Authority, and Mervyn King, Governor of the Bank of England. As well as these leading figures, some banking muscle also had to explain themselves, including:

HSBC chairman Stephen Green

Stephen Hester, boss of bail-out bank Royal Bank of Scotland

and former chairman of Lloyds TSB, Sir Brian Pitman

All in all, this will prove to be a quite conclusive account of the failings of the banking industry and will hopefully point those at the helm in the direction of sustainable lending and responsible selling. That’s the plan anyway, it may be wishful thinking, but someone’s got to do it. More tomorrow.

Banks  – they’ve been given a hard time recently, what with all the PPI mis-selling, unfair charges, outrageous bonuses, dodgy commission schemes, pressure selling, irresponsible lending, oh and the billions of tax-payer cash they’ve taken, and the stupidly high interest rates they’re charging despite getting their money at the lowest cost ever recorded.

So yes, they’ve messed up and we’re struggling through the consequences and the one overwhelming question is: Is there hope for the future of fair banking? With banks so publicly exposed as being money grabbing, profit at ANY cost, screw-mongers – is there any chance that the Great British public can trust financial institutions again?

Well, yes, in a word. Not all the banks were ‘at it’ and those that were stand to lose out to the new breed of superbrand banks such as Tesco and Virgin. These two promise to bring an alternative to traditional banking houses and will no doubt do well off the back of massive brand trust and loyalty.

But, what about the old-school bunch, they’re still the major players, they still service the majority of UK bank accounts and provide billions in essential lending each year. How will they change and win back trust? That’s what a meeting of the Future of Banking Commission (FBC) is going to try and sort out. The FBC is an independent group comprising MPs and financial experts and is backed by consumer campaign group Which?

In the next few weeks the commission, headed by MPs David Davis, John McFall and Vince Cable, is to produce a report detailing its conclusions on the collapse of the banking industry. It’s going to be an interesting read and will involve the real opinions of everyday banking consumers thanks to surveys by Which? If you want to stay up to date with the report; we’ll have the latest breaking news on this each and every day, right throughout the commission’s meeting. Bring on the change! non-politically speaking of course.

The cost of protection has seen a sharp increase in recent years as lenders and policy providers have had their PPI cash cow milked dry and sent to an animal rescue centre for rehabilitation.

Not only have costs increased because of the ban on PPI being sold alongside loans and the curtailing of rediculous premiums, but also because of PPI refund payouts and the dramatic increase in claim numbers since the beginning of the recession.

Lets take Mortgage PPI for example – according to Moneysupermarket the average cost of MPPI has shot up from £12.66 per month in August 2008 to £18.78 per month today. With prices set to continue rising as the economy struggles on, there has never been a more important time to have cover and make sure you shop around when buying it.

In yesterday’s blog post we talked about PPI mis selling and how it’s leading many people to cancel their policies and leave themselves exposed to repossession and bad debt. Following on from that, check out this advice from Karen Peterkin, financial adviser at Chiene & Tait Financial Services in Edinburgh. It’s her top ten tips to make sure you’re covered incase anything happened to you or your partner. A touch morbid, but well worth a read…

You may have read before at the blog about the increased risk that many individuals, couples and families are exposing themselves to by cancelling insurance and payment protection policies. Some people are doing this because of the recent PPI mis selling scandal which is great, but many are not replacing the useless policy with an appropriate one.

Homeowners across the UK are cancelling their policies as they’ve seen costs increase since the ban on single premium policies and the end of quick profit for the banks. Families who have lost an income are cancelling policies because they are viewed as a luxury. In all these cases, the removal of suitable protection for your repayments is helping to build a massive time bomb of potential repossessions, bad debt and heartache. Getting rid of useless PPI is right but those who do so must always consider the merits of a tailored and fairly priced policy.