So, despite all the cuts that have been made, the Government still need to borrow money and throughout July indebted us all to the tune of £3.8bn. Not good it seems and you’ve got to wonder where this money is going, because it ain’t going to help PPI claims victims what with the £2bn MOJ cut being announced. But, £3.8bn is a damn sight better than the month previous when it borrowed £14.7bn and May, when it had a £18.4bn hand out. The good news is: based on last years figures, the amount borrowed in July has been halved. Yippee. And who do we have to thank for keeping us up to date on the the ConDem bank account? Why, the Office for National Statistics (ONS) of course!

In total, public borrowing for the four months of the financial year so far totals £44.9bn. with the severe drop last month being due to 2nd installment tax payments. The OBR or Office for Budget Responsibility is predicting a total borrowing figure of £149bn for the financial year 2010/11, down from £155bn in the year previous. So we’re going the right way, but with a net debt of £816.2bn or £927.4bn if you include bank bail-outs, we’ve still got quite a journey on our hands. Thank you Johnny Banker you absolute bleedin…

With the amount of claims that we’ve been handling this year, it came as no surprise that there has been a whopping 21,000 PPI claims and complaints made to the The Financial Ombudsman Service (FOS) since April. This amount includes almost 2,000 in the last week alone, adding to the 114,500 consumer complaints in the last five years.

The level of awareness about mis-sold PPI has increased dramatically recently with more TV advertising appearing and more claims companies setting up. This development within the industry has lead to over half of the 114,500 complaints being made within the last 18 months. But what difference have all these complaints made? Well, the Financial Services Authority (FSA) has so far fined 24 firms in the UK to the tune of £13 million.

The Ministry of Justice (MoJ) is one of the largest departments in Government, it’s job is to manage prisons, oversee criminal cases, ensure democracy and regulate PPI claims companies like us.

The MoJ is one of the largest departments with a budget of £9.2bn

Under new instructions from the PM to cut £2bn in costs from the department, a third of the MoJ’s 80,000 staff could see their jobs at risk. To give some idea of huge an amount that cutback is, £2bn could pay for the entire prison service for a year, despite this the MoJ is taking it seriously and has asked all it’s departments to find savings of between 25% and 40%. It goes without saying that, for mis-sold PPI alone, the MoJ does a pretty important job and one that allows no room for compromise or sub-standard practice.

The fear is that with the MoJ’s funding cut they may not be able to provide an adequate service, putting citizens and consumers at risk of dealing with unscrupulous individuals or companies.

As we’ve mentioned frequently over the last 18 months, the Financial Ombudsman Service (FOS) and The Financial Services Authority (FSA) have been overwhelmed by the number of PPI claims they’ve received. With consumer awareness growing and times harder than ever, the thought of regaining some money has proven to be an attractive prospect for many struggling Brit.

So, to help the FSA deal with the increase in claims, resources were shifted around and the Financial Services Act 2010 gave them the ability to make firms compensate clients through a collective redress scheme. Collective redress is similar to the US class action tool used to combine multiple identical claims into one claim against the alleged offender. This method would save a lot of time and resources and could mean quicker payouts but the power can only be used in against offences that a court or tribunal would find to be failures and the Limitation Act 1980 would limit victims to making their claim within 15 years of the failure occuring.

Did anyone watch Panorama last week? It was about bank charges and as well as highlighting Halifax’s 3650% pa overdraft fee it also covered the £2.6bn the banks make on penalty charges every year. It made some good TV but also some tough points about PPI claims and the shocking profit that the banks are making on interest rates.

Spealing to the Secretary of State for Business, Vince Cable, presenter Adam Shaw asked why the UK banking industry was so unfair, Mr Cable responded with an appreciation for the bank’s uncompetitve attitude, saying: “When we talk about restructuring the industry, we mean a more competitive system where consumers are not ripped off.”

The show also touched on emerging alterntives to the traditional banking houses, we’ve already spoken on the blog about Tesco and Virgin but the programme introduced us to Metro Bank, the first new high street bank for over 100 years. Metro’s approach is one that could prove very popular, putting aside jargan and zero competition and embracing customer service. This fresh approach goes as far as calling their branches ’stores’, opening at 8am, having glass-less counters, offering lollypops and even providing dog biscuits. With a current system that seems to be failing and with lending down by 10% over last year to 3.2bn, the lowest level in a decade, a new bank with new ideas could go a long way.

After mis-selling Mortgage Payment Protection Insurance (MPPI) left, right and centre, and causing countless PPI Claims, mortgage brokers are now increasingly reliant on the protection market to survive. Talk about full circle, protection products now account for around 40% of a typical adviser’s income and around 75% of all brokers say that PPI is “very important” to their business.

It’s easy to see why the poor old mortgage advisors have seen their paypacket hit, with figures showing mortgage related income falling to just 44% of their total average income. But they’re not down in the mouth, most advisors are looking forward to the job and welfare cuts and are predicting an increase in protection sales as a result.

Times are tough and any money saved is seen as a good thing by households up and down the country, so when it comes to insurance, it seems UK consumers are heading online to find the best deals. Accountancy firm Deloitte has conducted research into spending habits over the past 12 months and found that price comparison sites are increasingly being used for insurance product purchases.

It’s findings show that 34% of people with general insurance policies have switched provider in the past 12 months to get a better deal and a third of people said they were now more likely to use a price comparison website. Some encouraging news also came out of the research, according to the stats: fewer consumers are cancelling their insurance policies to avoid mis-sold PPI and save money. In last years survey, 11% of people said they were considering stopping their Payment Protection Insurance (PPI) to save money, but this has fallen to just 6% over the last 12 months. Good news, as long as the policy has been sold correctly.

As we now know, despite the high number of PPI claims being made, the Financial Services Authority (FSA) is to be replaced in 2012 by a number of independent bodies but that hasn’t stopped the financial watchdog handing out justice. As well as fining companies, the FSA also penalises individuals for financial infringements and the latest person to fall foul of the law is David Head, a director of Essex-based mortgage and insurance broker network, Compliance Services.

The company operated as a network and recruited mortgage and insurance brokers but came unstuck when Mr Head failed to put in place systems and controls to ensure the brokers acted correctly. He also failed to properly supervise insurance brokers linked to a firm previously disciplined by the FSA for Payment Protection Insurance failings and as a result was fined £10,500.

It’s monday, it’s July and it’s raining so one thing’s for sure: the English summer is here. Finance-wise, house prices are down*, the BoE base rate has remained at 0.5% and the Economy is up. So it’s a mixed bag of good and indifferent and still very much a situation to keep your eye on.

Closer to home, payment protection insurance claims continue to flood in to the Ombudsman but with unemployment still high (2.5 million at the last count) and May’s figures due for release this week, the number of people protecting themselves with good PPI is at an all time low. This of course can have some serious consequences, some of which are discussed in an article from today’s Telegraph…

The Financial Services Compensation Scheme (FSCS) is designed to compensate customers in the event of their financial service provider failing to deliver satisfactory goods. It is there for people who have been mis-sold PPI, who have lost out through no fault of their own or who have received poor service. The scheme is essentially a pot of money put together through a levy system.

The different financial institutions add a certain amount each year depending on what they provide; banking, insurance, intermediary services and the total is used to refund or compensate customers. With the massive increase in the number of PPI claims has had to come an adjustment in the amount levied and this increase has been big. There has been a 58% increase in PPI complaints over the past 12 months, with over 49,000 new PPI complaints received and 89% of them upheld. To cope with this amount of compensation, the FSCS has set a budget of £61m for the 2010-11 financial year which is nine times that of the previous year.