It was not until 2005, when the Financial Services Authority took over the regulation of the sale of general insurance, that the backlash against PPI gathered pace.

The City regulator said it planned to make PPI one of its immediate priorities and issued its first report on the product later that year. In the report, it identified poor selling practices and lack of compliance controls in PPI market following company visits and mystery shopping exercises.

By late 2006, the FSA began fining smaller companies for mis-selling and issued a further report finding more evidence of poor compliance. This led to 24 companies entering “enforcement procedures” for PPI failings.

Over next few years companies including Alliance & Leicester, Egg, Liverpool Victoria and even the Land of Leather were fined for PPI failings.

In April last year, the banking industry lost a case in the High Court to stop customers demanding compensation. Weeks later, Lloyds announced that it would set aside £3.2bn for likely payouts. Other banks have followed suit, taking the total provision to about £6bn.

20/02/2012 - Telegraph.co.uk

The bailed-out bank is to take back a total of more than £1million from its former chief executive Eric Daniels and four other current and previous senior directors under new clawback provisions. The move will prompt calls for other banks to follow suit.

It is understood to come on the orders of Lloyds chief executive Antonio Horta Osorio.

Earlier this year he volunteered to give up his bonus of up to £2.4 million because he had taken a leave of absence due to exhaustion and felt bosses’ rewards ought to reflect hardships suffered by customers during the downturn.

The clawbacks have been imposed due to Lloyds’ involvement in the payment protection insurance (PPI) mis-selling scandal.

Daniels is to lose £360,000 of his £1.45m bonus for last year. The 60 year old former chief left the bank in March 2011 but remained on the payroll until the following September receiving £100,000 a month, although he did no work for his erstwhile employer.

The PPI scandal was one of the biggest of its kind in recent years.

Customers were sold insurance policies when they took out loans that were meant to cover repayments if they fell sick or lost their job.

The products were extremely lucrative for the banks but often turned out to be of dubious value to consumers. Lloyds last year said it would have to write off £3.2 billion to cover the cost of redress.

City watchdog the Financial Services Authority called on the banks to reflect the seriousness of the scandal in executive pay-packets. Horta Osorio was not at Lloyds at the time of the mis-selling.

The other bosses who face a clawback are departing finance chief Tim Tookey, who will sacrifice £235,000 of his £942,000 payout; Helen Weir, the former head of the retail bank, who will lose £218,000 from her bonus of £875,000 award; wholesale banking boss Truett Tate, who retires this month and will have £260,000 of his £1.05 million bonus clawed back and former head of risk Carol Sergeant. The pay and bonus of Ms Sergeant, who held a senior position at the Financial Services Authority prior to joining the bank is not disclosed as she was not a board director.

The bank is able to claw back the bonuses because they were awarded in shares to be released over three years so it will simply not pay out the full awards.

So far others have fought shy of clawbacks for fear disgruntled bosses may mount legal challenges.

Lloyds is expected to reveal losses of around £3.5 billion when it issues its full year results for 2011 later this week. Taxpayers own a 41 per cent stake following a £20bn government bailout.

Fellow state-backed bank Royal Bank of Scotland has set aside £850million to cover PPI claims. Its boss Stephen Hester succumbed to pressure to give up his £963,000 bonus after a public outcry, but there are now likely to be fresh demands for further clawbacks on previous bonus awards because of PPI.

20/02/2012 - Dailymail.co.uk

According to the company, which specialises in complaint and feedback management software, UK banks and other financial services organisations will not be able to meet PPI remediation guidelines without “significant, rapid investment in systems and processes”.

This is due to FSA underestimation of the processes and resources needed by organisations to comply with the regulation.

In partnership with the Office of Fair Trading, the FSA guidance document focused on two types of income protection: short term income replacement and non-insurance forms of protection such as debt waiver and debt freeze.

The regulator’s guidance forces firms to look at all previous PPI complaints they have received to identify any systematic failings in their sales procedure. Any consumers that may have been affected by these failings must be contacted and offered redress, even if they haven’t complained.

Paul Clark, chief executive officer at Charter UK, said: “Most banks and other financial services organisations are in the midst of pilot PPI remediation projects in order to evaluate the scale of the task facing them.

“Early reports from the industry suggest that the cost of implementing these remediation programmes is likely to extend far beyond the budget and available resources that have been set aside to handle the compensations themselves.”

He adds that the three to eight week window the FSA has set “does not look achievable”.

Not only are financial institutions facing difficulty meeting FSA requirements, but some believe the scandal will lead to a dearth of people taking out PPI even when they genuinely need it.

Roger Humber, director at UK debt waiver specialist Protection Products, worries that the number of borrowers with no form of payment protection will increase, and with it the number of accounts falling into arrears.

07/02/2012 - FTadvisor.co.uk

Providing more disclosure on bonuses in its annual results than ever before, the bank said the average bonus for staff at investment arm Barclays Capital was cut by 30% to £64,000 in 2011 while the the group total bonus pool was down 25% at £2.2 billion.

However, chief executive Bob Diamond refused to be drawn on questions about his own bonus, amid reports he could be in line to receive more than £10 million in payouts.

Addressing the wider issue of bonuses, the American banker said: “We need to balance remaining competitive with being responsive to the public mood.”

But the bank’s moves to cap and slash bonuses were not enough to appease unions and anti-poverty campaigners as “serious questions exist about the moral backbone of those running the financial service sector”.

The results come after weeks of conflict over bankers’ bonuses, in which Royal Bank of Scotland chief Stephen Hester turned down his £963,000 bonus amid mounting pressure and Lloyds boss Antonio Horta-Osorio waived his payout following a leave of absence.

Elsewhere, Barclays, which reported pre-tax profits of £5.9 billion for 2011, down 3% on the previous year, said it introduced a cap on the cash part of bonuses for investment bankers at £65,000.

The results said annual incentives for executive directors and the eight highest paid senior executive officers were down 48% compared to 2010 on a like-for-like basis, though Mr Diamond would not confirm how his own pay fitted into this decline.

Once described by Lord Mandelson as the “unacceptable face of banking”, Mr Diamond is one of the world’s richest bankers, with an estimated wealth of around £95 million.

The American, who became chief executive on January 1 last year, is now on a £1.3 million salary and is reportedly in line to receive £11 million in payouts this year.

However, those hoping for a peek at Mr Diamond’s pay packet will have to wait until the annual report is published in mid-March. Mr Diamond said the mood surrounding the industry was not positive but the private sector would only deliver much-needed growth to the wider economy with a “confident” banking sector.

David Fleming, Unite national officer, said: “The announcement on bonuses today by Barclays is yet another illustration of the banking sector continuing to ignore the public outrage and disgust at their behaviour.

David Hillman, spokesman for the Robin Hood Tax campaign, said: “Bob Diamond can only be hiding his bonus because he fears it will look unreasonable to most ordinary people. His potential pay package alone would keep hundreds of nurses and teachers in jobs.”

Mr Diamond hailed Barclay’s business lending record in 2011 as it beat the Project Merlin targets drawn up between Britain’s top five banks and the Government.

Barclays delivered £43.6 billion of gross new lending to UK businesses, including £14.7 billion to small and medium-sized enterprises, exceeding its Merlin target by 13%.

“We really got on our horses to get businesses going,” Mr Diamond said.

The improved lending figures came as the business revealed income growth in every division but investment arm BarCap.

The UK retail and business banking division, where customers increased by 3% to 760,000, saw pre-tax profits increase 60% to £1.4 billion, after stripping out the division’s £400 million charge for mis-selling payment protection insurance (PPI).

The division saw the number of current accounts increase by 2% to 11.9 million, savings accounts were up 5% to 15.1 million, while mortgages increased 2% to 930,000.

Credit card business Barclaycard saw net operating income increase 21% to £2.8 billion, while pre-tax profits were up 53% to £1.2 billion, excluding the division’s £600 million PPI hit.

Meanwhile, the bank slashed its bad debts by 33% to £3.8 billion and cut its debt exposure to struggling eurozone countries Portugal, Italy, Ireland, Greece and Spain reduced by 14% to £7.1 billion.

Barclays shares were 3.5% higher after the results were published, but did dip into the red earlier in the session as analysts questioned some of the figures.

BarCap saw pre-tax profits drop 32% to £2.96 billion in 2011 as market turmoil, sparked by recession and debt contagion fears in the eurozone, increased throughout the year.

The quarter-by-quarter breakdown at the division shows profits falling from £1.3 billion in the first three months of the year to £267 million in the fourth quarter.

Meanwhile, Barclays said it would hit its target to generate a return on equity of 13% later than 2013, after reporting 6.6% return last year.

Ian Gordon, analyst at Investec, said: “Bob Diamond’s track record is unrivalled but today is not his finest hour.”

He added: “It is BarCap’s dominance of the group and the weak external environment that render the resilient performance across retail and business banking almost irrelevant.”

10.02.2012 - The Independent

Mr Hester - who earns £1.2million a year - said pay fairness should not be achieved by ‘cutting down success.’

He caved in and waived a near £1million performance payout for 2011 after intense public and political pressure.

Mr Hester said he surrendered the bonus - to be paid in shares - because of the damage the row was doing to the bank.

Speaking publicly for the first time after the furore, he suggested it would have been an easy decision to walk out of the bank once his bonus came under threat.

Mr Hester told BBC Radio 4’s Today programme: ‘I am not a robot and there has been some deeply depressing moments over the last three years.

‘In the end, I came to the conclusion that it would be indulgent for me to resign.’

He said he ‘drew on inner strength’ to continue at the bank which is 83 per cent owned by the taxpayer.

Mr Hester added he had been tasked with ‘defusing a ticking timebomb’ and the spotlight placed on him made the job more difficult.

The 51-year-old said it was wrong to attack successful people - although added that what bankers are paid is a political decision.

‘I believe strongly in issues to do with equality of opportunity. I believe in a progressive tax system - I have no problem in paying more tax,’ he said.

‘But I don’t think cutting off success or cutting down success is the way to go about fairness in society.’

Mr Hester’s shares-only payment was worth around £963,000, but he could yet pocket as much as £39million in total during his time with RBS.

The bank had already set aside £3.3million for Mr Hester’s bonus next year.

He said he surrendered the 2011 payment because it was hurting the bank.

‘I took the judgment that it was going to be damaging for RBS to stay in the intensity of the spotlight that we had got into,’ he said.

Mr Hester spoke publicly for the first time about his decision to waive his bonus today after revealing to staff that the restructuring of RBS has already cost £38billion.

The money has gone on disposing of assets, loan losses and restructuring charges.

The Government’s stake in the bank cost £45billion and the final cost of the restructuring could yet surpass this.

Mr Hester said today that while he had ‘great sympathy and understanding’ for people concerned about the high rewards in the banking industry, such ‘societal issues’ were ultimately a matter for politicians.

He said it was essential that RBS was able to recruit the best people to resolve the problems it had inherited from the former management, which led to it being bailed out by the taxpayer.

‘When I was asked to take on this job three years ago, I had to replace the whole senior management team of RBS,’ he said.

‘We had to go around the world looking for the best people, not just people to run a bank well, but people to defuse the biggest timebomb in history in terms of bank balance sheets.

‘Those people are doing a good job. I think they deserve recognition. If they do a good job, it is our task to make sure that there is a connection between the job people are doing and how they get treated.’

Mr Hester acknowledged that bank bonuses were controversial but said RBS had not realised what a storm his award would create.

‘I understand why these issues are controversial - particularly in a time of austerity. Of course, we underestimated that, going forward,’ he said.

He admitted the banks had been guilty of ‘hubris’ after 20 years of ‘unbridled expansion’ leading up to the crash of 2008.

‘I think in the case of the banking industry there was over-confidence and, with the benefit of hindsight, over-rewards,’ he said.

However he warned it was important not to ‘demonise’ a sector which remained essential to the economy.

‘Let’s not demonise a whole industry. Let’s not demonise something that is fundamental to the world economy,’ he said.

‘Banking is important, financial services is important. It supports the economy, it supports millions of jobs and we need to remember that.’

While he acknowledged that as a largely state-owned organisation, RBS would be held to a higher standard than other banks, he said it could not be treated completely differently.

‘It may make our job more difficult. We have to try to behave in a way that also leads on some of these difficult issues of how we interact with society,’ he said.

‘We can’t be completely different from all the people against who we compete but I accept that we need to have a sensitivity.’

He added: ‘We would make a mistake as a society if we forget how wealth is generated, how successful people are motivated.’

Daily Mail - 08.02.2012

Which? has written a letter to the remuneration committees of banks involved in the scandal, stating that they would be breaching the City regulator’s pay code unless they go one step further and force related bonus arrangements to be cancelled.

Banks owe billions in PPI compensation

The Financial Services Authority (FSA) has also called on banks to ‘claw back’ bonuses from those responsible for mis-selling PPI in the first place, even if they have since left the bank.

Lloyds, Barclays, Royal Bank of Scotland (RBS), Santander and HSBC have been forced to set aside over £6 billion between them to pay compensation to consumers who were mis-sold PPI. Barclays and RBS, which have made PPI provisions of £1.16 billion and £1.05 billion respectively, claim they had largely stopped selling PPI by 2009, when the FSA’s remuneration code was introduced.

That was the first time that a clawback provision was introduced into bank executives’ contracts. Given that PPI was, for a long time, a very profitable business, these bonuses are likely to be huge.

Government banking rhetoric tested

The FSA rules state that deferred awards can be cut if the business suffers a material failure of risk management or downturn in performance.

Richard Lloyd, executive director at Which? said: ‘This is one of the clearest examples of unfair treatment of customers and reward for failure on an industrial scale.

‘There has been a lot of rhetoric from the government and banks about linking performance to pay. This will be the test to see what that rhetoric means in practice.’

06/02/2012 - Which?

Without the Payment Protection Insurance bill UK profits were down 6% to £1.5billion due to higher costs and “intense” competition.

The firm’s boss Ana Botin hailed a 25% rise in small business lending to £10.7billion.

The bank also held its share of new mortgage lending but saw net lending, which takes into account repayments and people switching, plunge 80% to £1.1bn.

Santander benefitted from a 38% fall in bad debts to £508m, much of it due to a decision to only give unsecured loans to existing current account customers.

The bank opened 836,000 current accounts in the year and issued 543,000 more credit cards, up 25%.

This included 145,000 new 123 Cashback Credit Cards which pay 1% for money spent in supermarkets, 2% in department stores and 3% on petrol.

Profits at the group’s Spanish owners dived 98% after it slashed the value of property investments there and in Portugal.

01/02/2012 - mirror.co.uk

Last year, Santander made a provision of £538m to cover the expected cost of settling PPI mis-selling claims.

The cost of PPI claims was one of several factors blamed by the bank for lower profits. Santander said continued low interest rates, higher funding costs, and the impact of new regulations had all hit its profit margins.

Ana Botín, chief executive of Santander UK, said 2012 was also expected to a “tough year” for banks.

“Economic prospects have deteriorated markedly even in recent months, whilst increased regulatory burdens and funding costs will impact the results further,” said Ms Botín.

Despite the downturn, Santander said it had exceeded its Project Merlin business lending target, as the bank lent £4.3bn, beating its target by £300m.

This was helped by the addition of 200 banking advisers at five new UK corporate banking offices.

In retail banking, Santander said it had opened 836,000 new current accounts in 2011, while an “upfront interest” bond launched by the bank had gathered in excess of £160m of new deposits.

The problems in the UK business were reflected in Santander’s wider operations. The bank said it would have to take a €3.2bn provision against toxic loans, of which €1.8bn recognised new losses on repossessed Spanish real estate.

Santander, which is the largest bank in the eurozone, reported total revenues for 2011 of €30.8bn, up 5pc year-on-year. However, pre-tax profits were almost €3bn lower than the previous year, coming in at €9.15bn.

Despite the fall in profits, analysts at broker Espirito Santo Investment Bank said Santander’s results were “positive”.

“We believe the results were positive on the back of an operating performance above our estimates coupled with the cleaning-up effort that saw Santander anticipate potential new requirements and be one step ahead of its competitors,” said Espirito Santo.

The broker noted that the bank’s performance in the Spanish market was a “concern” with continuing falls in asset prices in its home market likely to continue hurting its earnings.

Mariano Rajoy, Spain’s new prime minister, has made forcing banks to properly account for the value of their real estate holdings a key part of his reform package. Speaking last month, Mr Rajoy said: “If your piece of land is worth 100, it can’t say on your balance sheet that it’s worth 1,000.”

Santander is also facing the challenge of closing a multi-billion euro capital shortfall by the middle of the year as part of a move by European regulators to shore up the region’s banking system.

The bank has already moved to sell off businesses, including its Colombian operations, to raise capital, as well as pushing through so-called “liability management” programmes that have seen it attempt to push its bondholders to accept more of the cost of recapitalising the bank, much to their dismay.

01/02/2012 - Telegraph.co.uk

Figures released by the Financial Services Authority (FSA) show that £379 million was paid in compensation to customers in November – the highest total of any month.

This is an increase of more than £100 million from the previous month, when banks and lenders paid out £268 million in compensation.

The compensation payout in October had been a record in itself, while September had seen compensation payouts total £222 million.

The figures for November 2011 were supplied to the FSA by 16 unnamed financial firms, which collectively had a 92% share of all PPI complaints in the first half 2011.

The record-breaking month has brought the total amount of compensation paid to customers to more than £1 billion since the scandal began.

In contrast to the high sums paid out in the latter stages of last year, compensation for the first six months of 2011 was just £215 million in total.

This is because of a legal challenge by the British Bankers’ Association, which was rejected by the High Court in April.

The High Court decided that the rules relating to the mis-selling of PPI could be applied retrospectively, meaning that more than three million people could apply for compensation.

This has led to the banks and financial lenders’ compensation bill reaching more than £1 billion. And this is expected to rise sharply in 2012, as customer complaints continue to increase.

The Financial Ombudsman Service (FOS) recently revealed that it had received 55,907 complaints in the final quarter of 2012 – up 10% from the previous three months.

PPI is a policy designed to take on outstanding repayments in the event of a loss of income, from redundancy or illness, but it was mis-sold to people who did not want it or need it.

30/01/2012 - moneyexpert.co.uk

While the focus is on the chief executive, other senior bankers at RBS are expecting to receive bonuses for their efforts in 2011. They are also due to be handed shares they were awarded three years ago under long-term incentive plans amounting to millions of pounds. Among them are John Hourican, who runs the investment bank and could get £4m, and Ellen Alemany, based in the US.

Liberal Democrat peer Lord Oakeshott called for “a really tough line” to be taken after the bank revealed a year ago that 323 of its key staff (although not all in the investment bank) had taken home £1.1m on average in 2010. “The RBS million-a-year club looks about as hard to join as the National Trust,” said Oakeshott. It has already been announced that any bonuses paid at RBS and Lloyds Banking Group, also bailed out, will be capped at £2,000 in cash – a measure intended to allow employees of the high street operations to get their bonuses – with the remainder in shares or bonds issued by the bank.

Some 3,500 City-style jobs are being cut by Hester who is credited with shrinking the investment bank and takes the total number of roles lost since he took the helm to around 33,000.

Fresh questions will now be asked about the intentions of his counterparts at rival banks.

António Horta-Osório, the chief executive of Lloyds Banking Group announced earlier this month that he will not take an annual bonus for 2011 that could have been worth £2.4m. Horta-Osório said that he took the decision because of the “tough financial circumstances of people” as well as the bank’s poor performance and his two month’s absence following a severe bout of insomnia. After returning to work on 9 January, Horta-Osório had discussed the potential bonus with his family before telling the board of the bank, which is 41% owned by the taxpayer, he did not want to be considered for a payout.

Bob Diamond, chief executive of Barclays, could receive as much as £3.4m as his bonus for 2011 – and a total pay deal of £10m or so – although a group of the company’s largest shareholders have warned they will not accept lavish payouts to Diamond and other senior figures.

He and two other investment bankers at Barclays last year shared more than £100m, including £30m in pay and bonuses for 2010 and another £77m for past performance.

Barclays is scheduled to publish its 2011 profits on 10 February and HSBC a fortnight later, when it is traditionally the first of the banks to publish full details of how its staff have been paid. Neither Barclays nor HSBC was bailed out by the taxpayer.

The chief executive of HSBC, Stuart Gulliver, who took over last year after running the investment bank, could be in line for up to £4.8m if he was awarded his maximum bonus for 2011. Gulliver, who has a base salary of around £1m, intends to cut 25,000 jobs by 2013 as part of radical rethink of an original strategy of international expansion.

Lloyds Banking Group is in the process of trying to claw back some of the £1.45m bonus paid to its former chief executive, Eric Daniels, in 2010.

It was awarded to Daniels just weeks before his successor, António Horta-Osório, decided the bank should put aside a provision of £3.2bn for payment protection insurance mis-selling, which drove Lloyds into a loss. When Daniels was awarded the bonus – which was 63.3% of his maximum potential payout – in February 2011 it was deferred for three years.

30/01/2012 - Guardian.co.uk

This was an increase from the £268m paid out in October, the Financial Services Authority (FSA) said.

PPI was supposed to repay people’s loans if their income dropped because they fell ill or lost their jobs, but thousands were mis-sold the policies.

The figures are supplied to the FSA by 16 unnamed firms.

These firms accounted for 92% of all PPI cases in the first six months of 2011.

After losing a High Court test case in April, banks were told to deal with 200,000 complaints which they had put on hold pending the hearing’s outcome.

Redress paid to customers has climbed dramatically since the conclusion of the judicial review.

Earlier in January, the Financial Ombudsman Service (FOS) said there had been a renewed surge in PPI complaints in the final three months of 2011.

The FOS received 55,907 complaints in the final quarter of the year, up by 10% from the previous three months.

26/01/2011 - BBC.co.uk

Her defence comes amid reports the Financial Services Authority is pushing for banks to cut bonuses to reflect their losses over the payment protection insurance (PPI) mis-selling scandal.

“He [Stephen Hester] was brought in to restructure RBS in extraordinarily difficult circumstances and has done a very good job. The attention on him is not right,” said Ms Knight.

She pointed out that any bonus paid to Mr Hester would be entirely in the form of RBS shares that will be subject to a “lock-up and claw-back”.

“Those running the banking industry now are different from those at the time of the crisis. Much of the debate about pay is targeted at those who have come in to sort it out,” she said.

RBS denied on Thursday that it had decided to pay Mr Hester an annual bonus that could be worth as much as £1.6m based on the bank’s current share price.

Sir Philip Hampton, chairman of RBS, said a report that a decision had been made on the bonus was “inaccurate and premature”.

“Neither the Remuneration Committee nor the Board has discussed the position on the bonus for our CEO for 2011 at this stage. Any suggestion to the contrary is therefore untrue,” said Sir Philip.

Mr Hester is eligible to receive an annual bonus from a share pot containing 6m RBS shares. At RBS’s closing share price tonight of 27.44p, the bonus is potentially worth as much as £1.65m.

On top of his salary of £1.22m, Mr Hester is also eligible for a further deferred share award as part of a long-term incentive plan that is potentially worth as much as £4.52. He also receives annual pension contributions worth £420,000 and other benefits of about £8,000.

Ms Knight admitted she understood the public and political concerns over banking industry pay, but said UK regulation was “much tougher” than in other countries.

“If a bonus is paid now, the criteria for that bonus have to be agreed with the Financial Services Authority. Most of the bonus will be subject to a lock-up for several years and the tax paid on it will be high at around 60pc,” she said.

Ms Knight said it would be up to the Government through its 83pc shareholding in RBS ultimately to decide whether Mr Hester will get paid all or part of his annual bonus for 2011.

“This is political, all the parties are taking this [bonuses] as an issue. People in a recession don’t see why others should be better off than themselves,” she said.

David Cameron has called for a clampdown on “excessive” executive pay and the Government is expected to set out new pay guidelines next week.

20/01/2012 - Telegraph.co.uk

The paper reported that the regulator is demanding banks take into account the multibillion-pound compensation bill for PPI mis-selling when they calculate pay-outs for 2011.

It said the FSA had been having robust conversations with the banks and had been pushing them hard to recognise PPI in their bonuses.

Pay discussions between the FSA and the big banks are set to continue over the coming weeks. The FSA told the FT it was ‘vigorously engaging’ with the banks to ensure they were not paying out large bonuses if they had not yet met tough new capital requirements.

The FSA does not have power to intervene on bonuses but reportedly believes that as bank shareholders bore the brunt of the charges through writedowns made in the first half of 2011, so too should bank staff.

23/01/2012 - citywire.co.uk

More than two-thirds (68%) of cases were resolved in favour of the customer, down from 92% between July and September, the ombudsman said. The controversial insurance, designed to protect people in case of illness or unemployment, had been sold with mortgages, loans and credit cards since the 1990s. Up to 6.5m policies a year were sold, but banks received 1m complaints regarding the policies in 2011 alone.

To cover its costs of handling PPI cases, the ombudsman proposed charging financial firms a supplementary case fee of £350 in addition to the standard case fee of £500 for each PPI mis-selling case referred to the service. But the fee will be chargeable only when businesses have more than 25 cases a year.

Natalie Ceeney, chief ombudsman, wrote in the latest Financial Ombudsman Service newsletter: “The challenges of our PPI workload are unprecedented. The number of new complaints about mis-sold PPI that we are assuming we will receive in 2012/2013 – 165,000 – will account for around 60% of our new cases next year.

“But we could receive a significantly higher or lower number than this – and there is considerable uncertainty about the volume of these cases in future years.”

17/01/2012 - guardian.co.uk

PPI complaints now make up 54% of the FOS’s workload.

The FOS, which only deals with PPI complaints that financial firms have failed to resolve, ruled in favour of the customer in 68 per cent of the cases it dealt with in the final three months of 2011.

This is a significant fall from between July and September 2011, when it ruled in favour of the customer in 92 per cent of cases.

Millions of PPI policies were routinely sold with mortgages, loans and credit cards from the 1990s.

The insurance is designed to meet credit payments if the policy holder is unable to pay due to illness or unemployment, but millions of people were sold policies that were invalid because they did not fulfil the qualifying criteria.

Some policies were sold to people who did not need them and many people did not realise that the insurance was optional.

For years the banking industry refused to admit that PPI had been mis-sold, but was forced in May 2011 to adhere to the Financial Services Authority’s (FSA’s) demand that past sales of the policies should be reviewed.

The FSA also said that future sales of PPI should be much more strictly regulated.

Earlier this month the FOS said it was disappointed at the number of customers still waiting for financial companies to deal with their PPI complaints.

It is considering introducing a fee of £350 for dealing with PPI cases, which firms would have to pay in addition to a £500 standard case fee.

18/01/2012 - FinanceMarkets.co.uk