High street bank Lloyds has confirmed that it will be reducing bonuses paid to 13 executives by £2m as a result of mis sold PPI claims costs. The former chief executive Eric Daniels is one of the 13 and stands to lose £580,000 from his £1.45m bonus. Another four directors will have their bonuses cut by between £190,000 and £260,000 with another eight executives receiving around £100,000 less than was agreed.

The bank is taking back bonuses paid to executives as a punishment for mis selling PPI

The cuts are delivered in the form of a reduction in deferred shares and are a direct result of the bank’s mis-selling of payment protection insurance (PPI). Chris Skinner, Chairman of the Financial Services Club: “It will be interesting to see if other banks follow this lead.”

Lloyds was forced to put aside £3.2bn last year ready to be paid out to any customer that has been mis sold PPI and makes a claim. The UK’s biggest lender didn’t make the cuts at the time of awarding the bonuses because it was not aware of the mis selling and it will be the first time bonuses have been taken back by a bank in the UK.

In line with the appetite for refusing large bonuses, the Group’s current chief executive, Antonio Horta-Osorio, has refused his 2011 bonus payment.

Some encouraging news for the economy at last – the latest figures on home buying loans from the Council of Mortgage Lenders (CML) showed a 4% rise in the number of home loans issued in November. The actual number of loans totalled just over 47,000, up 3% on November 2010.

House sales rose slightly in November

At a time when money is tight and unemployment benefit claims are at an all time high, some positive news from the housing sector is well received.

Of course the level of house sales is no where near pre-crisis figures, with less than half the amount of transactions being carried out. Speaking about November’s results, the CML’s director general Paul Smee commented: “A rise in mortgage lending towards the end of 2011 is a welcome indicator for the industry considering confidence has been weak due to fragile economies.”

He added: “We should expect a further increase in first-time buyer activity over the next few months as they push through their purchases to take advantage of the stamp duty concession before it ends in March.”

The temporary exemption from stamp duty initiated by the Labour Government in 2010 will come to an end in just over two months on 24 March. The exemption allows buyers to secure a property for less than £250,000 and avoid the 1% stamp duty.

Citizens throughout the UK are furious over the way banks and other financial institutions have sold PPI claims. However, as payment protection insurance loses favor throughout the UK, it also continues to gain attention throughout mainland Europe. Citizens are purchasing payment protection insurance for both loan and credit card debt.

In fact, throughout nearly two dozen European countries, PPI claims are worth nearly 11 billion euros. Granted, the value of PPI plans have dropped slightly over the past four years, but the drop is barely noticeable. More significantly, the drop in the total value of PPI plans was largely due to the fact that UK citizens decided to shed nearly 3 billion euros worth of the plans. Factoring UK plans out of the plan, the value of all PPI plans in the other 19 countries in the eurozone increased from 7.31 billion euros to 9.99 billion euros.

The demand for PPI plans in the rest of Europe have increased by nearly 40% since 2007. According to these reports from Finaccord, the demand for PPI packages is definitely growing in Europe. They would like an explanation for the discrepancy between the demand for payment protection insurance in the UK and the mainland. Is it possible that other countries have developed a better and more sustainable system for making PPI work for them?

According to their studies, France has developed the best approach for selling PPI plans. Finaccord suggests that banks from other countries look towards France’s approach to selling the products to get a better idea for selling the products. French law requires that banks advise their customers that they have additional options for purchasing PPI packages. This encourages customers to look into other options and minimizes the chances of being defrauded.

Critics within the UK suggest that their government look into the way France regulates PPI packages. This may give them some insight into how to better regulate these packages and minimize the risk of developing another massive case of PPI fraud that could cost customers hundreds of billions of dollars.