According to Barclay’s representatives, about a quarter of its shareholders are likely to challenge the company’s decision to increase salaries to its employees even as the company struggles to maintain profitability. Shareholders are even less likely to excuse the compensation agreements with CEO Bob Diamond and other leaders on the executive team. Shareholders seem particularly upset about the fact they were the ones who footed the bill for Diamond’s relocation costs when he moved from the United States. Reporters have asked Diamond for greater details on the degree to which shareholders are contesting their frustrations with him and other bankers.

Changes in the PPI provisions come at a substantial cost to Barclays. This has led many industry experts concerned that the provisions may cause additional financial challenges for the other banks. This could expand upon the banking crisis and force Barclays, Santender and other leading banks to ask for government payouts.

The newest forms of Barclays profits would have increased by 22% if it hadn’t been for the PPI lawsuits or the interest the bank had to pay on its debt. Without those costs, the bank would have had an easier time defending its payments to executives. However, the bank expects its shareholders to be even more upset than they had been in prior weeks.

Barclays has taken some measures to appease unrest among its shareholders. The bank has rescinded half of the bonus that Diamond was paid. This was the first time that a bank executive had ever faced a clawback on its fees. However, that decision may not be enough to get the support of the voters, because Diamond still holds close to £9 million pounds from the bonus he was paid.

Barclays and its competitors have already faced a number of legal challenges brought on by consumers and the FSA. However, they may be forced to change their position after shareholders protest the direction of the company.

After publishing a few stories on the progress being conducted in the PPI claims cases, many customers have complained that they have not felt any progress has recovered at all. They have been making some progress with the number of loans they were ordered to pay off over the past year. Thus far, the banks have paid off less than a third of all the liabilities they for PPI claims.

Many people have shared stories of waiting up to half a year before being entitled to any form of compensation. Lloyds customers are some of the biggest offenders of the mis-sold PPI claims issues. Reporters spoke with a number of representatives from Lloyds and other banks to determine what the issue was. A Lloyds spokesperson said that the bank was able to meet the payment target for the majority of its customers. Most customers have actually received payment in less than a month.

Lloyds representatives said some customers were forced to wait a while to receive their payments because of one isolated issue. They assured reporters that these issues have since been resolved.

Although these words could be encouraging for many customers, they may not be as reassuring if Lloyds is paying things late due to possible insolvency problems. The delayed payments of the other banks suggests this may be the case.

Whatever the reason, customers who are waiting a long time to receive compensation for their PPI claims may need to go to the Financial Ombudsman Service to appeal their case. Two years ago, people going to the FOS could have their problems addressed in less than six months. However, PPI claims have grown tremendously over the past few months. At this time, they now account for about 50% of all the claims before the FOS.

Although many customers are frustrated with the wait,experts suggest that waiting is the best thing for them to do. They advise against consumers going to claims agencies who suggest they will be able to get their money back to them more quickly. Claims management firms can be effective at helping people who don’t want to do the work on their own. However, they have no way of helping people get their money back more quickly.

As the cost of filing a PPI claim starts to increase, many customers find themselves asking whether or not it makes any sense to be able to even file a claim anymore. Although this is a valid concern, most experts suggest customers file a PPI claim if they are entitled to one.

Many experts believe that nearly 12 million customers may be entitled to compensation for purchasing mis-sold PPI claims. They have also observed a few other mistakes that many customers are making.

Customers are often using claims firms that won’t charge a fee if they don’t win their case. They feel that it is safer to go this route, but it ends up costing them a lot more than they would either assume. The moment you win your case, the claims firm will take nearly a third of your settlement. This is considerably expensive if you are trying to get back your own money.

While the temptation to use a no-claims no-fee representative, doing so is a mistake for most people. Financial professionals suggest that their customers speak with a good PPI lawyer first and assess their chances of winning a PPI case before proceeding. In many cases, their chances of winning the case are much higher than they would have thought. Customers with solid cases are encouraged to work with a claims representative who will charge a smaller compensation or a flatter fee to avoid losing a substantial part of their settlement.

The success rate for PPI claims has dropped slightly. However, new data suggests that is often due to people making thin claims as they try to take advantage of the PPI compensation opportunities, even if they know they don’t have a real case. Customers with a good case are encouraged to take their case to the right experts and work with the FSA to get their money back.

New PPI laws ban banks from engaging in point-of-sales. In effect, this will reduce the likelihood that customers will unknowingly purchase a PPI package with any loan or credit product they purchase. According to the new laws, banks will have to wait a minimum of one week after selling any financial package before they can try to sell any PPI product along with it.

Additionally, financial institutions will need to much more direct and transparent with providing the details of any PPI product they sell. They are now required to inform their customers of the structure of the package and the terms under which it will work. They will also have to specify the costs of any payment protection insurance package they sell to their customers.

Which? stated that these new changes will create more transparency and encourage customers to make more informed decisions. However, the new laws will only benefit customers if they understand the terms and are more careful with the decisions they make. The PPI scandal that took place over the last couple of years shows that many customers understand the risks associated with the insurance packages. Therefore, they are likely to review these policies much more carefully in the coming months.

Banks will be required to share this information with their customers on an ongoing basis. They will need to update their customers on an annual basis on the costs of the packages. They will also remind the customers that they have the right to cancel the insurance at any time.

Martyn Saville, one of Which?’s experts on insurance programs and mis-sellings, said these changes are more than welcome. He said that Which? and consumers have been waiting for changes in PPI regulations for a long time. They are encouraged that the changes have finally been passed and are confident they will help protect consumers from another major insurance scandal.

Which? states that it is still opposed to the use of PPI products, arguing that they are rarely a worthwhile investment for most consumers. Their website encourages consumers to divest their attention on more diversified income protection plans, which tend to have broader coverage and are usually more transparent.

Barclays is starting to realize that the costs associated with handling PPI claims is increasing the cost of doing business. Their newest filings with banks in the United States shows how concerned they are starting to feel. Barclays said that the cost of paying PPI expenses was increasing substantially over the past quarter. It stated that the trend may or may not affect future profitability, but that the impact would be more clear in time.

Barclays observed that the cost of the liabilities it faces from the newest PPI claims is close to $1 billion. Almost half of that fee still needs to be paid.

Barclays said that it used a variety of factors to make these determinations. Although it didn’t release the exact methodology it used to estimate its liability, the bank said it used metrics that were similar to some of the other large banks.

Barclays did mention that the variables it used were highly subjective. It stated that one of the biggest factors it took into consideration was complaint flow. Barclays stated that it made its estimates largely off of the trend in new complaints that were raised. However, a couple of new reports from Which? suggest that this assumption may not be completely accurate. While the number of new claims has increased in recent months, the rate of successful claims has decreased. Nonetheless, that doesn’t necessarily mean that banks such as Barclays are going to have a lower liability. They are likely to incur other costs as well, such as legal consulting fees.

Barclays didn’t provide substantial data on the changes in the number of new complaints. However, the Financial Services Agency said that a number of surveys found that more customers cited problems with Barclays than any of the other large banks.

Topshop, Topman, BHS, Miss Selfridge, Evans, Outfit, Wallis, Debenhams, Russell & Bromley, Ryanair, House of Fraser, Asda, Laura Ashley, Mothercare and Harvey Nicholls. (M&S store/credit card holders are also affected, which I’ll cover towards the end).

Aside from M&S cards, all of the above are run by Santander and a recent court ruling has judged that an outstanding balance of £5,126 on one of their cards will be written of because it is unenforceable.

Santander Didn’t Appeal The Court Ruling

At Shoreditch county court Judge Henrietta Manners ruled that Santander could not collect a debt of £5,126 on Diana Mayhew’s Harrods card because they did not issue a new set of Terms & Conditions when they upgraded the store card to a store-branded credit card. Mrs Mayhew says she never asked for the upgraded card, issued in 2003 and interestingly Santander failed to appeal against the county court ruling.

Store credit cards have been issued without being requested and without appropriate T's & C's

In a similar way to the lack of supporting information that led to the huge PPI claims scandal, the legal issue in this case is with a lack of fresh T’s & C’s being sent out with the upgraded card. The judge said: “even though Diana Mayhew had activated the unsolicited credit card, regulation 7 of the Consumer Credit Agreements Regulations of 1983 still required the bank to supply fresh terms and conditions.”

She added: “Compliance with the regulation requires a copy of the fresh agreement containing the relevant prescribed information to be served on the debtor.”

“If customers weren’t provided with a copy of a new agreement, with the new card, to agree to and sign and return, it would lead to unenforceability.”

Millions of unsolicited cards issued

Santander bought the GE Capital card business in 2009 and in doing so it took over running millions of store cards and store-branded credit cards. The 2003 upgrading process involved several million unsolicited credit cards being sent to holders by GE Capital, this has led to the potential for unenforceable store card cases arising.

When asked about the case, an OFT spokesman commented: “This judgement supports a previous challenge by the OFT that a standard term in the GE store card agreement, purporting to give GE an unrestricted right to change the terms of the agreement, is legally unfair.”

M&S store/credit card holders also affected

M&S card holders are potentially affected too because the retailer’s card business is a wholly owned subsidiary of HSBC bank and in September 2003 it changed 2.6 million of its store cards to credit cards as well. The high street retailer did bow to OFT pressure at the time and made customers aware that the new card can simply be ignored. But when asked whether or not they issued cardholders with updated terms and conditions at the time of the upgrade; M&S declined to say. Read into that what you will.

The FOS said that it will create a fee of £350 to handle any PPI claims that are brought to its attention. The service said that it isn’t committed to the fee indefinitely and expects to review it again next year.

Many experts don’t like the idea that the FOS intends to start charging its customers to receive fees for their services. However, the FOS said that it is still going to lose money on the arrangement, because the fee for handling a PPI case is about £750. Furthermore, the growing number of PPI cases are placing a substantial financial burden on the firm.

PPI cases are now going mainstream. The FOS believes that the number of new cases is going to increase 15% over the next year and a half, which would mean they will make up about two-thirds of all cases they are handling.

Although many groups criticize the FOS for its decision to impose a fee, they are more concerned by some of the unanswered questions it leaves. One of the biggest concnerns is that they have no idea why the service decided to set the fee at £350. Unfortunately, they have a few larger concerns they felt necessary to bring up.

Consumer protection groups felt that a fee could be permanent unless stated otherwise. They argue that the FOS should insist the fee is temporary from the start, otherwise they risk the possibility that it will become permanent over the coming years.

Another major concern is that increasing the PPI fees would make handling PPI cases more profitable for claims firms. This could encourage them to engage in unethical behavior. In addition, it could lead some of the PPI claims handling firms to engage in criminal conduct. The number of fraudulent cases involving PPI handling has grown substantially over the past few years.

The FOS said that its ability to handle cases in a timely manner has become more limited as it tries to keep up with the growing number of cases coming to its desk. Also, many claims aren’t going being resolved outside of court anymore and others are becoming more time-consuming as some customers are looking to engage in long-drawn out disputes with the banks that sold them the PPI packages.

The FOS may be opposed to the new measures. However, some experts speculate they are trying to reduce the workload by discouraging consumers who have been victimized by the PPI case from coming forward.

The data published at the end of March found that the number of new complaints raised against Lloyds was nearly 490,000 from the beginning of July until the end of the year. This figure is a compilation of all claims against Lloyds and its subsidiaries. The number of complaints against Lloyds was significantly greater than any other bank. Barclays was another bank that didn’t fare well, coming in with 290,000 complaints.

Although Lloyds received more complaints than Barclays overall, Barclays faced a larger branding crisis as a result. While most of the complaints filed against Lloyds were due to challenges with its subsidiaries, the complaints against Barclays were chiefly raised against the main bank. This led some analysts to speculate there might be more fundamental challenges facing the main bank itself.

The FSA is raising a number of concerns overall as to the way many of the banks are managed. The Royal Bank of Scotland was another bank that was considered for a number of the challenges that it faces. One of the subsidiaries of RBS was recently fined nearly 9 million pounds because it failed to follow regulations implemented to dissuade financial criminals from using the bank’s services for money laundering.

Although financial experts find a number of concerns with the way these banks are being managed, the PPI mis-selling problems remain the most concerning. The number of payment protection insurance complaints nearly doubled over the course of the year. The banks are going to have to face a number of challenges as they try to regain the confidence of their customers in face of one of the largest scandals the financial community has ever caught wind with.

The FSA will followup with additional data in the coming year to observe how PPI cases are being handled and predict whether the number of complaints will continue to rise.

While the growing number of PPI claims has clearly become a major problem over the last year, the FSA didn’t learn how significant of a problem it was until earlier this week. A report issued on Tuesday found that the number of PPI claims issued in 2011 grew by 20%. By the second half of the year, insurance and PPI claims amounted to more than 1 million, an unprecedented figure.

The FSA has been tracking PPI claims for over five years. They never expected they would track more than 1 million claims. As frightening as this situation is for the FSA, the FOS is having a much more difficult time dealing with the issue. More than five out of six of all insurance related claims are now linked to PPI claims.

The growing number of PPI claims sheds some light on the ongoing problems at the big banks. According to many customer advocacy groups, the banks are failing to change their policies to treat their customers more fairly.

The reason the number of claims increased so significantly in the second half of the year was due to the fact a higher court ruling on the banking community’s liability over mis-sold packages. The court ruled that banks were liable for claims made over the previous five years. As a result, more than 3 million people were eligible for restitution.

The British Bankers Association had hoped it would be able to win the case. After the court’s decision last April, the bank’s decided to cut their losses and didn’t appeal the decision further.

Although there were a number of reasons that customers filed complaints, more than nine out of ten PPI claims pertained to the misleading sales tactics. This was one of the key reasons the FSA felt it was necessary to make some changes to the rules regulating PPI packages.

The FSA anticipates that more PPI packages will be issued over the next couple of years as customers see that the success rate for raising PPI packages has increased. Financial institutions are required to share all of their PPI figures so the FSA can have an accurate idea of how many PPI claims each institution has really had to file.

Their first statement centered around the legality of PPI packages in and of themselves. According to new rules from the Financial Services Authority,  PPI packages are illegal if they are sold with a loan. Two years ago the British Bankers Association tried to fight the FSA, arguing that some of the policies they have come up with could have devastating impacts on the banks.

Nevertheless, the FSA stands by its decision to make it illegal for banks to issue PPI packages alongside their loans.

Additionally, Which? confirmed that customers are only able to successfully make about 1 in 10 of the claims they filed. This demonstrates that the banks are hardly intent on making sure the banks issuing them have any intention of making sure they will be used fairly.

According to Lucy Widenka, insurance similar to PPI may still hold some value for consumers. However, customers should carefully consider what they are purchasing. One of the things they could receive is a comprehensive income protection that would cover all of their income if they faced a problem. While PPI packages are limited to a single debt, other packages would offer a much more comprehensive debt coverage plan that would be more likely to cover their financial situation if they got sick, injured or faced an unexpected financial problem.

According to Which? the number of British citizens who have taken out PPI for their credit cards is nearly 10 million. Given the rate for a potential payback, about 9 million of those citizens have wasted their money taking out that insurance. Which? suggests that citizens seriously reconsider any PPI purchases they are considering and read the new guidelines released by the FSA.