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.

The Financial Services Authority (FSA) was created by Gordon Brown in 1997 and designed to regulate UK banks, issuing fines and penalties if they misbehaved. Basically they were the police of the banks, only that’s not really fair on the Police. That’s because the FSA didn’t stop the banks misbehaving and a few million mis-sold PPI victims and unemployed people across the UK can vouch for that.

Anyway, it seems the shelf life of an FSA is 15 years because the current Chancellor of the Exchequer George Osborne said he will abolish the Financial Services Authority and give most of its power to the Bank of England, starting in 2012. Osborne blames the FSA for failing to prevent the financial crisis that left us in the deepest recession in post war times.

Over the next two years the watchdog will be wound down and replaced by three bodies:

- Prudential Regulatory Authority
- Financial Policy Committee
- Consumer Protection & Markets Agency

Whether having three regulators instead of one will make any difference remains to be seen and many have already criticised the move as “simply rebranding”.

The Financial Services Compensation Scheme (FSCS) has said financial advisers must pay an £80 million interim levy to help pay back mis-sold customers. The general levy for 2010/11 is £148 million, £24 million of which will be paid by investment intermediaries to cover defaults.

Strangely, the FSCS will not be imposing a levy on the general insurance intermediation class, even though PPI claims make up almost 50% of the 2010/11 levy. However, general insurance brokers will need to pay a £61.4 million levy to cover PPI compensation payouts over the next financial year. Speaking about PPI’s affect on the levy, Alex Kuczynski, interim Chief Executive of the FSCS said: “The costs of PPI, investment and insurance claims are among the main drivers of FSCS costs this year and into 2010/11.”

Payment Protection Insurance News: Insurance provider Axa has ended its contract with Berkeley Alexander to underwrite two of its mortgage payment protection insurance (MPPI) offerings. As of March 31st, the underwriting contract will end and as a result, commission payments on some MPPI products sold via the broker have been cut to 15%.

There has been a few changes at AXA over the last year, in March 2009 the broker withdrew its Payment Protection Insurance products for new customers, also known as accident, sickness and unemployment cover. Speaking about the withdrawal from the MPPI contract, an Axa spokeswoman said: “This particular scheme is quite small and, in consultation with the broker concerned, we will no longer underwrite this product after March 31.”

After yesterdays post about the FSA slapping a £770,000 fine on Swinton for mis-selling PPI, it’s refreshing to see a Company come out and respond in a humble fashion to the penalty imposed. We thought it only fair to share with you what they said…

“Swinton takes the matter very seriously and will be contacting all customers concerned. The company apologises to any customer affected, and has set up a dedicated unit to deal with the PPI cases.

The company takes the view that the simple, low-cost PPI product it sold, (which cost £15 or £20), was different to that more commonly sold for many hundreds or even thousands of pounds alongside mortgages and loans in the rest of the financial services industry.

The company did not deliberately set out to breach FSA rules or to disadvantage customers and acted in good faith in the development of its sales process which it believed was reasonable and proportionate for the low cost of the product.”

It goes on and if you’ve eaten your lunch with half an hour to spare, you can read it here.

As if it wasn’t bad enough that Payment Protection Insurance (PPI) providers and sellers bundled it in with loans when it wasn’t either asked for, needed, wanted or known about. But now we hear of providers refusing to pay out to those who actually wanted it. Needless to say, this refusal has led to many consumers making PPI claims against their lenders but why wouldn’t they payout in the first-place?

Many providers refused to allow their customers use of PPI because they were in breach of the terms and conditions of the cover. The reasons for customers being in breach included the age of the individual, employment type or maybe an ongoing illness that wasn’t mentioned at the start of the policy. The thing is, these breaches occured because sales staff either didn’t ask the right questions when discussing the cover or quite simply, apart from to get a yes or no – they didn’t discuss it at all.

The Financial Ombudsman Service (FOS) is looking for a grass, a snitch, insider info to help it’s case against the Payment Protection Insurance (PPI) Companies.

To find the information they need, the FOS has gone straight the middle men, the brokers of the industry who sell on insurance to customers. They’ve been asked to supply confidential details of distribution agreements they had with insurance providers during the years that protection providers were regulated.

As is expected and despite the fact that more people apply to reclaim PPI payments every day, loan and mortgage brokers are reluctant to blow the whistle on their suppliers. They argue that this could lead to them losing their deal with the lender and restricting them further in an already limited marketplace.

Emma Parker, spokeswoman for FOS, said:

“We are asking for standard things around the commercial agreements that firms had at the time and always try to ensure that we have all the relevant, accurate information”.

As always, where there’s money involved (or a loss of it) there’s going to be a lot of arguing and indecision around the table. But hopefully, the brokers will see that their customers are the UK public, not the lenders.

Payment Protection Insurance (PPI) has been included in a great many loans, including mortgages. What this means is that you could be paying for a policy that you didn’t ask for or want as well as paying back your mortgage. But thankfully, the FSA have stepped in and agreed a £60m package to reimberse all those that have been unfarily sold PPI.

Whether £60m will be enough, only time will tell but it is a big enough figure to get things started. The PPI compensation will be repaid by the Mortgage Payment Protection Insurance (MPPI) providers and is just part of the plan to clean up PPI and give customers their money back. To find out more about the scheme, check out this article in the Financial Times.