The Wheels Fall Off The Auto Industry - Volkswagen To Buy Back Cheating Cars

Volkswagen, the US government and private lawyers have reached a deal whereby VW will buy back some of the nearly 600,000 diesel cars that cheat on emissions tests and spend just over $1bn to compensate owners.

The Guardian reports that some owners would get a choice of having VW repair their cars or buy them back.

 

How the $1bn is to be allocated and distributed remains to be seen.

 

VW is of course not the only car maker to have cheated wrt emissions, doubtless the other cheaters will be looking at their books to see how much they can afford to pay out.

Pension Fees Compensation

Customers of Prudential; Scottish Widows; Abbey Life; Countrywide; Old Mutual; Police Mutual may get £2000 redress https://t.co/ON8AJthvsm

— Paul Lewis (@paullewismoney) March 4, 2016

Another means by which claims companies will try to make money at the expense of hapless savers and pensioners!

CPP The New PPI

It seems that there has been another mis-selling scandal, akin to the PPI one, wherein people are entitled to seek redress, this being CPP (Card Protection Plan).

However, according to the Martin Lewis (writing in the Telegraph) up to five million people may be missing out on the compensation because they confuse the issue with PPI and throw away a legitimate ‘‘fill this in to get your money back’’ form for junk mail.

Since February more than seven million people have been sent CPP redress letters, dating back to policies since 2005. Many were under names such as CardGuard, Card Protection Plus, Card Safe or Egg Emergency Cover.

Martin Lewis estimates that £900 million remains to be claimed, with a deadline of August 30 looming on the horizon.

I wonder if there is any financial product in this country that hasn't been mis-sold?

"Free" Money - The Great PPI Giveaway

Courtesy of the greed and lack of ethics of our tainted financial services industry, there are billions of pounds to be "given away" by the recalcitrant banks and lending institutions that conned people into buying the now widely derided Payment Protection Insurance (PPI) policies.

Simon Gompertz has published the headline figures:

"The extraordinary scale of the PPI compensation grab:

£5bn compensation still to be paid out

12 million policies may have been mis-sold

800 claims management companies  trying to get a slice of the money

£2m a month being spent on advertising by these claims companies

They charge 25% or more in fees, plus VAT

Banks are making 50,000 compensation payments a week

That's around £400m a month being paid out

The payments average £2,750, some are £16,000 or more

Some say this massive cash payout could give a boost to the economy

How to claim compensation? Contact your bank, or the  Financial Ombudsman Service"

Given that the banks showed no ethics in selling these now widely derided products onto their naive customers, there is no shame in asking for them to pay the money back (but don't waste money on using a claims company).

Banks Cave In Over PPI - Or Do They?

The British Bankers' Association (BBA) has stated that banks will drop their legal challenge to paying compensation for mis-selling Payment Protection Insurance (PPI).

The volte face is a result of Lloyds giving up the fight last week, and announcing that it would set aside a £3.2BN compensation fund, closely followed by Barclays announcing that it has thrown in the towel.

However, before those with "£ signs" in their eyes start popping the champagne corks in anticipation of receiving a payout, customers of the banks should consider this. Banks will simply fund these claims by putting up charges on loans/credit cards and, most likely, will introduce charges for current accounts.

One way or another, it will not be the banks that end up paying the compensation.

President Blocks Compensation

Olafur Grimsson, the President of Iceland, has thrown a spanner into the works re the Icelandic government's promise to pay £3.4BN of compensation to Britain and the Netherlands for the collapse of the Icesave bank in 2008.

President Grimsson has declared that a national referendum must be held to determine whether or not the legislation is passed.

Given that a petition urging him not to sign the bill had attracted 62,000 signatures (25% of Iceland's population) by last night, it is clear which way the result of the referendum may go.

The Equitable Life Game Plan

The Treasury, via Yvette Cooper the Chief Secretary, issued an apology to the long suffering Equitable Life victims.

Quote:

"I think the whole House regrets the mismanagement of the society. I wish to apologise to policyholders on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place."

However, there will be no compensation merely some possible payments to those who have suffered "disproportionately" (whatever "disproportionately" really means).

Those policyholders who are hooping that they may receive some form of payment need to be aware that the Treasury's game plan is very obvious:

- Delay
- Delay
- Delay

The objective being to offload the problem into the hands of the next government (unlikely to be Labour) after 2010, and to ensure that as many policyholders as possible have died of old age before any payment is finally agreed.

Pre Funded Pot

Mervyn King, the Governor of the Bank of England, has told the Treasury Select Committee that banks should pre fund a compensation pot that would cover customers' losses in the event of another Northern Rock collapse.

He believes, quite rightly too, that the lack of a 100% guarantee of savers' deposits contributed to the run on the bank last year.

The current scheme is funded by the banks, which pay an annual levy. However, it does not hold enough money to compensate savers in the event that a bank collapses.

The Financial Services Compensation Scheme currently guarantees 100% of the first £35K of savings each person has at a bank.

That of course is not enough given the size of many deposits.

Mr King's suggestion is welcome. However, given the large number of people who have now deposited savings offshore with higher interest banks (eg in Iceland), this guarantee will not cover those in the event of a failure offshore.

It is very likely, given people's naivety about money, that these depositors are blissfully unaware that they are exposed to the collapse of their foreign banks.

That again could have disastrous effects on the economy.

An Inequitable Life

Following on from the recent report by Ann Abraham, the parliamentary ombudsman, in which she called for compensation for more than a million policyholders in Equitable Life there are now concerns that more than half of them may in fact get no compensation at all.

The Equitable Members' Action Group (Emag) has estimated that the cost of compensation could be around £4.6BN.

Many thousands of Equitable savers have gone through the Financial Ombudsman Service (FOS) to claim compensation for mis-selling. However, only 50% to 60% received any.

Given this, and the fact that the Treasury will not respond to the report until the autumn, it is unlikely that all the policyholders are going to come out of this scandal with the result that they would wish for.

Emag has threatened a judicial review in autumn, if the government does not satisfy them.

This will be a long battle, by which time many of the policyholders may well have died.

Apology Demanded

Ann Abraham, the parliamentary ombudsman, in a long delayed report has called for Britain to apologise to more than a million policyholders in Equitable Life and offer them compensation.

The apology, not that it will ever come, will be a tad late as the Equitable Life scandal occurred in 2000.

Equitable Life almost collapsed in 2000, after being forced to honour unsustainable guarantees stretching back 30 years. It eventually closed to new business in one of Britain's most dramatic financial scandals.

Ms Abraham has been investigating the scandal for four years, and is quoted in The Guardian:

"(Those) responsible for undertaking financial regulation should act in a way that is compatible with the duties and powers which parliament has conferred on them.

Those responsible for the prudential regulation of Equitable Life failed to do so throughout the period covered in my report."

Vanni Treves, who became chairman of Equitable Life in 2001, said that the regulators' failure to tackle problems at the society meant the government should compensate policyholders who suffered losses as a result.

"Year after year, the regulators failed to do anything about problems that were absolutely evident to them.

We have paid all the bills we felt we had a duty to pay. Now the government must pay the bills for its own failures."

Abraham noted that the bodies overseeing the insurer were "passive, reactive and complacent", allowing one person to be both chief executive and appointed actuary for more than six years thereby neutralising the appointed actuary's "whistle-blower" role.

Abraham's report recommended a compensation scheme to redress losses, and called on the government to act swiftly, as tens of thousands of policyholders have already died since Equitable Life closed to new business.

The FT estimates that the cost of compensation will be around £4BN.

It is all very well calling for compensation. However, there are two issues that will ensure none is given:

1 The government is broke and cannot afford to pay any.

2 The regulatory regime that failed the policyholders was set up by Gordon Brown, to pay compensation would be an admission of failure. Brown does not do "failure" or "apologies".

Given the recent financial scandals, eg Northern Rock, it is evident that the regulatory regime in the UK has not improved one jot since the days of Equitable Life.

There are other scandals waiting to break.

Sainsbury's Site Collapses

Sainsbury's website went down on 17 June and is still down, it has yet to confirm when the site will be back up and running.

Sainsbury's delivers to 90,000 customers a week and their average spend is approximately £80 per transaction. Therefore the glitch is estimated to have cost it already £1M in lost sales, plus the costs of £10 compensation offered to an estimated 20,000 people affected by the problem over Wednesday and Thursday.

This is not the first time that Sainsbury's have had problems with their online delivery service, as I can personally attest to.

The Great PPI Rip Off

Those of you who have been screwed by your bank or other financial organ into taking out an unnecessary and expensive payment protection insurance (PPI) policy should read this article in The Times, which shows that you can claim back up to £24K.

Quote:

"The insurance, which is bought by one in four people and is supposed to cover your mortgage or loan repayments if you are unable to work, is described as one of the last big rip-offs in the industry after endowment mis-selling and overdraft charges.

Banks often add the cover to your loan automatically, with many borrowers never realising they have it. Even when they do, most consumers are unaware of the extent of overcharging.

Mortgage cover from Halifax, for example, would add £103 a month to the cost of a typical £200,000 home loan, or £2,472 over two years. The cheapest cover on the market can cost two-thirds less."

However, as I have noted before, banks are not charities. The money that they repay to customers in the form of compensation will be made up for elsewhere, via increased rates on loans and mortgages.

They simply do not care about their reputations, or their customers.

Valuing Northern Rock

I see that the Treasury is having trouble (which it of course denies) in finding an independent valuer to assess compensation payments due to Northern Rock shareholders.

Unsurprisingly no one wants to pick up the poisoned chalice, as whoever does will be liable to be sued by disgruntled shareholders who still labour under the illusion that Northern Wreck has value.

Wouldn't the Treasury save itself a lot of heartache by simply allowing the shares to trade openly on the market, as I recommended in February, thus providing a real time and open valuation of the company?

Today, by the way, it was reported that The Wreck is looking to hire more staff to work in its debt division; a clear sign that its debts are going bad, and that the value of its mortgage book may need to be revised downwards.

Let me save everyone the time and trouble of trying to find a valuer, prepared to stick his neck out.

The value of Northern Wreck is zero (as I stated in February).

Problem solved!

Banks To Appeal

Eight leading street banks, including Barclays, HSBC and Royal Bank of Scotland, have sought permission to appeal against last month's ruling which gave the Office of Fair Trading (OFT) legal jurisdiction to determine whether bank charges are unfair.

If permission is granted bank customers, who have submitted claims for "rip off" fees, may have to wait years to receive their compensation.

Needless to say, there have been accusations that the banks are using this appeal to delay repaying customers.

Phil Jones of Which?, is quoted in The Times:

"The banks should stop stringing this out. The charges are seen as unfair by consumers so they should do the decent thing and pay compensation to those who have made a claim and reduce the fees to a fair level."

Whatever the outcome, one thing is for certain, the banks will find other ways to charge their customers. The most likely change will be an introduction of charges on all current accounts, whether they are in credit or not.

Banks are not charities!

A Pyrrhic Victory!

Britain's banks lost their battle in the High Court yesterday over unauthorised overdraft charges.

Mr Justice Andrew Smith ruled in favour of the OFT, stating that it can apply consumer contract regulations to decide if bank overdraft charges are fair or not.

In summing up, Judge Smith said:

"I reject the banks' contention that the Relevant Terms (the bank terms being challenged by the OFT) are exempt from assessment as to fairness under the 1999 Regulations.

This does not mean that the Relevant Terms are necessarily to be regarded as unfair or that they are not binding on consumers under the Regulations.

Those are not questions for me to decide in this judgment."

The OFT can now decide if the charges are unfair and, if so, what a fair fee should be.

However, the banks will undoubtedly appeal.

Those who expect to see a compensation cheque dropping through their door, in the near future, had better not hold their breath.

The rest of us, who did not slip into unauthorised overdrafts, can expect the banks to introduce charges on our accounts in the future.

A Pyrrhic victory!

Northern Rock Shares

The government has stated that, despite the suspension of Northern Rock PLC shares from listing and market trading, people are allowed to trade in bilateral off market or over the counter trades.

The current spread, apparently, is a ludicrous 25p-24p. This is of course absurd, given that the likely "value" of Northern Rock shares is in fact 5p or less.

However, the government, quite correctly, also warned that such trades wouldn't be entitled to claim compensation.

A statement issued by the Treasury said:

"Persons dealing in shares of Northern Rock, or instruments referenced to such shares do so entirely at their own risk."

Fair enough.

However, the question is, why are the shares still suspended?

Wouldn't it be better to allow them to be traded, and thus offer shareholders a chance to pull out now?

Indeed, wouldn't this afford the government a way of "valuing" the bank?

Northern Rock Nationalised

As expected, Northern Rock (or to give it its more formal title, Northern Wreck) is to be nationalised.

After months of dithering, Gordon Brown and his sidekick Alistair Darling have reluctantly been forced to conclude that the only way to safeguard taxpayers' money is to nationalise the bank.

Sharedealing has been suspended.

The government claim that it would seek to compensate Northern Rock shareholders based on the value of their shares. This "value" will be "independently" determined.

Darling has said that:

"The principles for assessing that compensation would be based on the company not receiving public support and that all specific financial assistance from the Bank of England or government had come to an end."

However, given that the bank is nothing but a dead corpse without the government supplied crutches, the "value" of the shares will be pretty close to zero. As I warned on this site some time ago, the shares are as worthless as Marconi shares.

Congratulations to the ex board of directors of Northern Rock (for their greed), and to Brown and Darling (for their dithering) for destroying a once fine institution!

Bloodbath at The Rock

After weeks of mounting pressure, following the destruction of Northern Rock, the CEO (Adam Applegarth) has finally been persuaded to fall on his sword and resign.

Applegarth will leave by the end of January.

His is not the only head to role in this debacle, that has seen not only a major brand/bank destroyed, but the first run on a British bank in 140 years (thus severely damaging the credibility of Britain's financial system and that of the regulatory authorities).

Matt Ridley, the much maligned and invisible chairman, resigned in October; the bank has now announced that four non-executive directors - Sir Derek Wanless, Nichola Pease, Adam Fenwick and Rosemary Radcliffe - will step down with immediate effect.

Applegarth earned £1.36M last year. Northern Rock refused to comment on whether Applegarth would receive a compensation package when he leaves the business. The more pertinent question is whether they actually would have the funds to be able to pay him.

Rock also stated that three further directors - David Baker, Keith Currie and Andy Kuipers - would step down from the board, although they would remain officers of the company.

A complete shambles, and a humiliation for Britain's financial services industry and regulatory regime.

What other horrors are lurking in the woodwork in other banks I wonder?

The PPI Scandal

The British financial services industry seems to have a death wish as far as it reputation with the consumer is concerned. Not content with foisting underperforming and useless endowment products on the unsuspecting public in the 1980's, it managed in more recent years to do the very same thing with PPI (Payment Protection Insurance) products.

The payback from this wanton mis-selling is now coming back to bite them.

Brunel Franklin, a claims specialist, has written to the Financial Services Authority (FSA) highlighting a number of serious problems in the PPI mis-selling sector, including what it believes is a deliberate statistical manipulation of the mis-selling figures by the PPI vendors.

According toe Brunel Franklin, Lloyds TSB and Welcome are some of the worst offenders and are offering gestures of goodwill across the board.

Anthony M. Sultan, managing director of Brunel Franklin said:

"We believe that vendors are using gestures of goodwill to mask the true scale of PPI mis-selling from the regulator. If the significant percentage of complaints are being dealt with as gestures of goodwill, how do we know that these are being declared to the FSA as complaints and showing up as incidences of mis-selling?

Lloyds TSB are pretending that there has been no mis-sale and no formal complaint, and are hoping to sweep thousands of complaints under the carpet under the guise of gestures of goodwill.

Our suspicion is that they are not being declared to the regulator and never appear in any FSA statistics on PPI mis-selling.

This mis-selling crisis may be bigger than endowment mis-selling in terms of the numbers of people affected and the total amount of compensation due, so it is perhaps not surprising that the vendors want to play it down in the hope that it will go away.

It will not go away and we are determined to get people the compensation they are entitled to."

As if endowments and PPI were not enough, the financial services industry also has "blood on its hands" wrt extortionate bank and credit card charges, credit refusals for people with good credit ratings, excess bonus payments to underperforming directors, excess management fees for underperforming investment funds and the destruction of Northern Rock.

Hardly a "stellar" performance so far!

Speculators Target Sterling

Speculators are targeting Sterling, in the belief that the Bank of England does not have enough money to head off the continuing credit crunch, and that it will be forced to cut interest rates.

Bloomberg notes that the UK's Financial Services Compensation Scheme has £4.4M to protect deposits, compared with $49BN in a similar fund in the US.

It will be interesting to see how the Chancellor's plans to offer a £100,000 guarantee to all savers will be financed. The banks will most assuredly target their customers for any "perceived" increase in their cost base arising from the implementation of this scheme.