The Financial Services Authority has told banks and building societies to compensate customers who may have been mis-sold payment protection insurance.

The ruling covers firms that have sold more than 40% of their “single premium” PPI policies at the same time as giving unsecured personal loans. The FSA will also target other companies that have mis-sold PPI when offering secured loans or credit cards.

The regulator has asked firms to reopen 185,000 rejected complaints about PPI.

Payment Protection Insurance is designed to cover debt repayments if you can’t work because of illness or redundancy, and is usually offered whenever you take out a loan, mortgage, credit card or store card, or bought something on credit.

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HSBC, Britain’s largest bank, has promised to boost lending to first time buyers. The bank says it will lend a total of £1.5 billion to home buyers with very small deposits before the end of the year.

The lender, which has launched an aggressive campaign to increase its share of the mortgage market since the onset of the credit crunch, said it will boost lending to home buyers who have managed to raise a deposit of just 10%. HSBC has already lent £1 billion to borrowers in this category this year.

Martijn van der Heijden, head of mortgages at HSBC, said: “Houses prices seem to have bottomed and rates are low – and many of those who put off [buying a house] last year are starting to look around again.”

He added: “HSBC has been out there throughout the recession, staying open for business for our customers. While other lenders were in retreat, we became the UK’s largest lender in the first half of 2009 on a net lending basis.”

Before the collapse of Northern Rock, mortgages with a 90% loan-to-value ratio were widely available. However, lenders quickly removed these deals in early 2008 as the property market began to slump.

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Information handed out by some banks to their customers was “incomprehensible” while fees were “opaque”, according to a European Commission report on banks.

The study found that only 9% of EU consumers switched current accounts between January 2007 and December 2008, compared with 25% of car insurance customers. A lack of transparency about the products and services banks are offering helped account for the lack of new customers among bank.

“Retail bankers are letting consumers down,” said EU consumer commissioner Meglena Kuneva.

“There is widespread evidence that basic consumer principles are being violated with problems from complex pricing to hidden charges and information that is unclear and incomplete.

“Banks need to put their house in order with a culture change in the way they treat customers.”

The Commission studied accounts offered by 224 banks across the EU. It found that in 66% of cases, experts needed to ask for further information about banking fees. Moreover, one in 10 banks did not post any information about fees on their websites.

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Years of savings would be needed to return household wealth to pre-recession levels, a Bank of England report has found.

According to the figures, it would take nine years for households that saved 10% of their income to bring wealth back up to the average of the last 20 years. However, the Bank said that it is difficult to assess how much, if at all, households will put aside in savings in order to rebuild their wealth.

The report found that between 1995 and 2007 the ratio of household spending to saving fell to historical low levels. Rising property prices, falling interest rates and easy access to credit meant that people were tempted to spend rather than save during the late 90s and early part of this decade.

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Students should be called to fork out thousands of pounds more for their education, including paying higher interest rate on loans and accepting a significant increase in tuition fees, a report by business leaders has recommended.

The Confederation of British Industry says that students should provide the majority of extra cash needed to fund universities in the UK. Under the proposals, students face the triple blow of higher tuition fees, fewer grants and a rise in interest on loans.

The CBI has also called for more sponsorship and bursaries from private companies. It said that Labour’s aim of getting 50% of 18 to 30 year olds into higher education should be temporarily suspended to help cover the ballooning cost of higher education and protect its quality in the face of increasing competition from other EU nations.

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A new scheme aimed at improving company pension schemes and making them attractive to employees has been launched.

The National Association of Pension Funds (NAPF), which represents around 1,200 funds in the UK, will award a Pension Quality Mark to employers who meet a set of minimum standards, including having a minimum employer contribution rate of 6%.

The move is designed to help workers better assess the quality of their employer’s pension scheme, as well as to improve the schemes on offer and increase take-up.

In what is a tough climate for pensions, nine out of 10 companies have now replaced their final salary pension schemes to new joiners and replaced them with less generous defined contribution versions.

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On October 6, the rules for Individual Savings Accounts change for those over the age of 50, with the annual allowance for tax-free savings rising from £7,200 to £10,200. Under 50s will have to wait until April to see their ISA limit increase.

However, according to research by the Post Office, two-thirds of those eligible for the increased allowance are still unaware of the new rules.

Richard Norman, head of Post Office savings, said: “With more people feeling the financial squeeze it is important to make your money work as hard as possible. But most people don’t know about the changes.”

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Up to 50,000 university students in England and Wales face starting their studies this year without receiving the full loan to which they are entitled.

The Student Loans Company, which organises the loans for the government, has struggled to cope with this year’s increase in applications, and says that full payments might not be paid until late October, over 6 weeks into the majority of university courses.

However, the company says that all eligible students should receive a “basic loan” shortly after their courses commence.
Students have reacted angrily to the news, with many complaining of missing personal documents, website failures, and spending hours ringing helplines, only to be told there is no way of speeding up the payment process. Thousands of students who applied for their loans on time had still not received them by the time they started their courses this week.

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The number of people in arrears on their mortgage payments has risen by 30% in a year, despite interest rates being set at a record low for the past six months.

51,000 more buyers fell behind by over three months on their mortgage payments in the second quarter of this year, it was revealed yesterday, bringing the total number of people in arrears to 403,000.

The scale of arrears has also increased, with those more than three months behind on repayments owing an average of £5,525, up from £4,916 a year ago.

Analysts yesterday warned that the figures could herald an increase in the number of repossessions as more people are made redundant later in the year.

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59% of all complaints made by customers against financial firms were upheld by the Financial Ombudsman Service (FOS) in the first half of 2009.

The FOS deals with complaints from customers when firms are unable to settle them themselves.

Over half the complaints registered by the group concerned the top five High Street banks - Lloyds Banking Group, Barclays, RBS-NatWest, Abbey and HSBC.

The FOS has taken to “naming and shaming” banks which receive a large number of complaints in order to force the companies to resolve more issues themselves.

“We have already been providing comparative complaints data on a private basis to the larger financial businesses - but this has led to no improvement in the standard of complaints handling by the worse-performing businesses,” said Walter Merricks, the outgoing chief ombudsman.

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