They say sunlight is the best disinfectant and if that’s true then there has been no better clean up job than that performed by the clear daylight shone upon the payment protection insurance insurance industry. The increased customer awareness, TV advertising and ever increasing number of PPI claim companies have all contributed to banks, lenders and insurers quitting their mis-selling ways.

For example, there has been a complete halt on the sale of PPI alongside loans, huge lenders have ditched selling policies and there’s even talk of sales people needing financial qualifications. The exposure of shady practices has also affected other insurance products, such as critical illness cover, which has seen payouts increase from 8 in 10 claims to 9 in 10. Good news.

The new policy on PPI from the Financial Services Authority (FSA) has barely been out a week and already it’s attracting some stern criticism from industry players. The latest one to comment is financial services partner at Beachcroft LLP, Dan Preddy, who had a particular issue with the application of current standards to PPI sales made before the FSA regulated general insurance mediation.

Mr Preddy said: “There will be deep disappointment about the application of standards retrospectively included to sales made before the FSA regulated general insurance mediation.” Overall the changes are designed to prevent further mis-sold PPI from occuring and paying back on PPI claims will cost the insurance companies between £2bn to £4bn. The FSA accepts that to do this properly, there are going to be some casualties and expects 5-10% of general insurance intermediaries to fail as a result of the refunds.

One of the most well-known PPI sellers, Paymentshield, has launched a new payment protection insurance product hoping to avoid the stigma attached to mis-sold PPI and make it easier for brokers and lenders to sell. The new product, named Income Shield, will do a similar job to PPI, protecting picking up payments on loans, mortgages, credit cards and the like in situations of financial difficulty.

The general insurance specialist promotes Income Shield as a standalone or alongside-credit product that will cover outgoings of up to £2,000 per month and can be bought as either:

- Full Accident, Sickness and Unemployment cover (ASU)

- Accident and Sickness cover (AS); or just

- Unemployment cover (U)

So, it doesn’t take a rocket scientist to see that essentially Income Shield is ASU, which is just another name for PPI and therefore we assume that it will be subject to the same regulations governing point-of-lending sale. Whether it will also create the same problems as PPI, remains to be seen

A rather significant court case concluded at the end of July that sailed right under the radar of most financial publications and barely made the news at all. Banking giant, Lloyds TSB, won a significant court case, which has since been dubbed ‘landmark’ by many finance and legal professionals. The case involved financial consumer David Speak, who brought four separate PPI claims against Black Horse Finance, a subsidiary of Lloyds, after defaulting on a PPI policy sold alongside a loan of £5000.

The Judge at the High Court decided to hear the PPI case so as to set a binding judgement for the county courts, which is where most PPI cases are heard. Mr Speak claimed that Black Horse had:

- Mis-sold the PPI as compulsory

- Misrepresented the product at point of sale

- Been in breach of insurance conduct of business rules: and

- Had breached the 1974 Consumer Credit Act by creating “an unfair relationship between lender and borrower”

The Judge ruled against all these claims meaning that future claims concerning PPI can only be made on grounds of misrepresentation at the point of sale. It is widely thought that this victory for Black Horse will put an end to the enforceability of debts challenge that many consumers try to make via mis-sold PPI.

One of the handful of ‘Next Gen’ banks emerging in the marketplace is Tesco Bank and already they’ve got into some hot water after the loss of personal customer data. The bank lost the names, addresses and contact details of 39 customers who had complained to Tesco about mis-sold PPI policies on credit cards.

According to a national newspaper, the information was lost in the post between offices in Manchester to Glasgow and cannot be traced. Tesco’s credit cards are provided by RBS and when asked who was to blame for the incident, Tesco said a ’service provider’ was culpable but would not name them. Losing data is nothing new to banks, but here’s where the difference is: Tesco, with it’s background in retail and customer service, offered all 39 individuals 2 years free insurance against any losses that may happen as a result of the incident. Not sure any of the more traditional banking houses ever did that.

Now we know that the idea of a blog is to give you fresh, new information that surprises and enriches your life, but today’s blog post is about something you could see coming a mile off. The number of PPI claims and complaints made to the Financial Ombudsman Service (FOS) is set to rise above last years total after 13, 520 complaints were recieved in the first quarter of 2010/11 alone.

According to the figures released by the Ombudsman, 34% of all complaints made in April, May and June where for mis-sold PPI and if the level of total complaints continues across all quarters, the FOS is to receive around 54,000 throughout the year, a 10% rise on last year’s total. Speaking about the figures, an Ombudsman representative said: “This should make it easier for everyone to see the numbers and trends as they emerge throughout the year rather than only seeing the figures annually, after the financial year has ended.”

As if the smell of countless PPI claims was just too bad to bear Lloyds has thrown PPI out of it’s pantry and into the trash bin of financial products. Lloyds have withdrawn its Payment Protection Insurance (PPI) products across all brands and channels, meaning policies will no longer be sold to new customers of Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse.

Existing policy holders are unaffected by the change and instead of flogging new policies, customers will instead be given a pamphlet about PPI produced by the British Banking Association (BBA). A spokesperson for Lloyds said: “This move reflects the uncertainty around the regulation of PPI sales and processes. The Group believes further changes in regulation will make it uneconomic to continue to offer these products in their current form.”

The Financial Services Authority and the Financial Ombudsman Service have had their fair share of PPI claims to deal with over the last 12 months and we’ve written about it at length. But we haven’t touched on the actual monetary refunds and compensation payments and how they are made.

This side of a successful claim is handled by the Financial Services Compensation Scheme (FSCS) which is a big ol’ pot of money put together by all the banks, lenders and insurers to cover any ’sub-standard dealings with customers’, shall we say. Last financial year, it paid out £204 million to over 21,000 claimants with over two-thirds of the cash going to victims of mis-sold Payment Protection Insurance. This just goes to show that the money is there for you to claim and there’s never been a better time to get started.

Lord Turner, the chairman of the Financial Services Authority (FSA), spoke yesterday about strong plans to ban self-certification mortgages. In doing so, he revealed research showing that 46% of households have no money left after paying their mortgages and living costs and have no Mortgage Protection Cover to help them out. The plans set out a structure where banks will have to conduct an ‘affordability test’ on every mortgage they sell.

In advising the banks, Turner said that income verification should be required in every case and that the new proposals should help cut the high levels of fraud in the mortgage market. There will be no ban on high loan-to-value mortgages, or controversial 100% mortgages.

If you’re thinking about making PPI claims (remember you could have more than one mis-sold policy) then now is the time to do it. Not only because the sooner you start the sooner you get a payout but also because there are roughly 1000 complaints a week about PPI being made to the Ombudsman every day and the queue for a response is getting longer.

Have a read of this article in todays Daily Mail, it’s got a full breakdown of mis-sold Payment Protection Insurance including individual stories of claimant journeys to a payout. Very interesting and worth a read…