As the tough times continue and the Chancellor delivers more cuts to benefits and state support, you would think that more people would be considering some form of Payment Protection Insurance (PPI). The reality is far from this and sees many mortgage holders and borrowers cancelling PPI to save money due mis-sold PPI claims and unemployment.

Of course, in the same way people should be encouraged to save money for the future, they should also be encouraged to protect themselves financially in the present, but the possibility of rises in Insurance Premium Tax (IPT) seems to contradict this viewpoint. Should Mr Osborne increase IPT then the cost of insurance will go up and in these austire times, that can only lead to cancelled policies and a massive risk gap.

Remember when we bailed the banks out last year, giving them hundreds of billions? Well don’t worry because we won’t have to do it any time soon, they’re all making record profits now by screwing you and me with the highest personal loan interest rates since 2001.

The Bank of England base rate is still at 0.5% yet the average loan rate is almost 25 times that at 12.4% meaning that our cash is being loaned back to us at criminally unfair rates. Back at the beginning of the decade in in 2001 the average loan rate was 12.5% which gave banks a 6.5% profit margin but with the current low base rate banks are making average profit margins of 11.9%. They mess the country up then bleed it dry, I’m not sure how this is legal but then; what does that matter to those boys.

The banking public have all had their run ins with the banks over the last few years and the majority of us have come out of it worse off. Whether it was unfair bank charges, mis-sold PPI or just the billion pound taxpayers bailout, those ‘trusted’ institutions have had more of our money than they deserve.

But there are a group of people who’ve had to suffer in silence – the employees. I’m not talking the Bentley driving, long driveway owning head honchos, but the thousands of branch staff across the UK. Their jobs, like so many other UK jobs, have been under threat since the downturn and with the latest EU ruling to break up banks, it’s a cert that many will go.

Heard of Cattles? They were a lender who gave loans to customers with poor credit ratings and that had been turned away by high street banks. Well, surprise, surprise: it all went the way of the pear for them; their shares are suspended and they’re straddled with a debt of £2.4bn.

To make matters worse, Karma has delivered another blow and now the sub-prime lender is facing a law suit for the alleged mis-sale of payment protection insurance (PPI). A class action has been launched against Cattles by a City institution for the misselling of insurance along with failing to pay-out on insurance claims.

According to a recent survey by MoneySupermarket.com, a quarter of the those that have it would consider cancelling their Loan Payment Protection Insurance (PPI). Plus, 6% would cancel Mortgage Payment Protection Insurance (MPPI).

These figures suggest that UK banking consumers are realising the unfair tactics that were used to sell PPI and in some cases, the uselessness of it.

Obviously, the decision to cancel an insurance should be thought about at great length but it’s fair to csay that those who have already made PPI claims for mis-selling have already decided on the value of Payment Protection Insurance

Getting money from banks and lenders is hard enough right now, never mind getting your own money back that was taken through unfair charges. But there are thousands of banking consumers across the UK currently making PPI claims because they feel they’ve been shafted by financial istitutions.

And as if the fact that you’ve made PPI payments without wanting or knowing about it wasn’t enough, the banks are now back to their old ways of paying out massive bonuses. Take Goldman Sachs for example, during the recent quarter, they dedicated 49% of revenue to paying staff, amounting to $226,000 for each of the 29,200 staff. If the bank continues to prosper for the rest of the year, employees could end up with average yearly pay of more than $900,000.

This crazy bonus and wage boosting structure can only bring us full circle back to where we were back in autumn ‘07, at the start of the credit crunch and ultimately – a recession. Have a read of this article in the Evening Standard that discusses the problems with the current banking system and shines a spotlight on some real alternatives to the way the UK does it’s banking business.

The Competition Commission has organised a consultation on the proposals for the restructuring of the Payment Protection Insurance (PPI) industry. The idea being that once the Barclays appeal is over, they can roll out the changes straight away.

Have a quick read of this article from Reuters that details the Commissions drive to make changes and push forward with making PPI a legitimate and useful addition to a borrowing (when sold properly of course).

A recent study by consumer watchdog Which? has revealed that banks and lenders are doing everything they can to make as much money as possible from Payment Protection Insurance (PPI) before it’s banned from sale alongside loans.

No surprise there then, in fact it’s got so expensive to have a regular premium policy that the overall costs are similar to the single premium policies that caused so many people to claim a PPI refund and featured at the centre of the PPI disgrace row.

Not all lenders are still offering PPI policies based on the advice of the Financial Services Authority (FSA) and ahead of a ban imposed by the Competition Commission. Some however, are and the Which? research showed that a £5,000 Santander loan with regular premium PPI (which isn’t lumped on-top of the loan and doesn’t incur interest) – costs the same as single premium PPI would have in 2008!

Now that’s not exactly in the best interests of the customer is it? And leads us to think that we’ll be busier than ever as more people make ppi claims to get back the money that they feel was taken unfairly.

Essentially, those lenders that still provide PPI are looking to squeeze every last drop out of their customers before the ban comes into play next year. When will a lender stand out from the crowd and just offer a good, honest service to the benefit of the customer, it’s not a lot to ask is it?

Call it Karma, Just Deserts or Long Over-Due, but finally payment protection insurers have felt the wrath of the chairman of the Financial Services Authority (FSA), Lord Turner, for hiking prices and reducing cover. About time.

At a time when the likelihood of unemployment-related claims is greater than ever, credit providers are happy to move the goal-posts and charge policy holders more for less cover. It’s pretty shocking that insurers, who have the trust of millions of people, can turn around and so blatantly disrespect the best interests of their paying customers.

A couple of months back we wrote about these rising costs and even now, we’re still seeing insurers restrict cover and hike prices. But given that insurance is the delivery of a promise and policies are sold on the basis of that promise, there could be plenty of ppi claims in the pipeline as people try and get their money back.

More Unemployment Means More PPI Claims

More and more people will need their PPI policy to support them over the coming year with the Association of British Insurers (ABI) reporting that PPI unemployment claims are soaring. In fact, claims at the end of January reached 32,099, which represents a 203% increase on the previous year.

In his speech, Lord Turner asked: “How many consumers would have taken up this cover if they had known that at the very time they needed the protection more, the price of it would significantly increase or the amount of cover decrease? This is an area where insurers must expect us to intervene to address poor consumer outcomes.”

Basically, you keep shafting customers and we’ll be on your case – which is great to hear. Because as a victim of mis sold or unfair insurance, you can make PPI claims and now that the insurers are getting it in both ears, they’ll be more inclined to pay back what’s owed.

With the recession still biting and unemployment showing no signs of slowing, more and more people are looking to PPI claims as a good way of bringing some money in.

In fact, the Financial Ombudsman Service (FOS) is predicting an 18% rise in complaints over the next 12 months and expects to take on 150,000 new cases in 2009/10. This figure will be up 127,471 on last year.

Commenting on the potential backlog of cases that could develop, FOS external relationship manager Niall Jeewoonarain said the Ombudsman had “lost patience with large firms stalling complaints”.

Complaints about mortgages and PPI refunds would fuel most of the rise in cases, he said. And with the ombudsman clamping down on lenders taking their time to resolve claims, the number of cases to reach a conclusion is expected to go up from 113,000 to 165,000 over the 12 months.

In addition to the increase in pressure on the lenders, the outsourcing of the adjudication of PPI complaints to accountants Deloitte should help the ombudsman to close more cases.