Plans to restrict the sale of the controversial payment protection insurance (PPI) have suffered a setback.

The Competition Appeal Tribunal has ordered the Competition Commission to reconsider whether a proposed ban on selling PPI alongside personal loans was appropriate.

The appeal against this restriction was made by Barclays bank, which argues that the proposed restriction on the sale of PPI limits customer choice.

PPI is designed to help cover the cost of bills and loan repayments in the event that you fall ill or are made redundant. The ban on its being sold in conjunction with the issue of a personal loan follows a two-year investigation into complaints over the high price and numerous exclusion clauses in the sale of PPI, which often aren’t properly clarified to the customer.

The Competition Commission said that it would study the appeal “closely”, but pointed out that if successful, it would affect just one part of its plan.

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A county court judge has told a lender that it cannot demand payment of an £8,000 debt, possibly paving the way for thousands of borrowers to default on repayments.

Judge Jacqueline Smart at South Shields county court has ruled that the MBNA credit card company cannot demand that a customer repay her debt. The company tried to force Lynne Thorius to repay the £8,000 she owed on her card.

However, Judge Smart decided that there had been an unfair relationship between MBNA and Ms Thorius because of the way in which the firm sold her payment protection insurance.

The credit card was sold to Ms Thorius in the official Sunderland Football Club shop in 2002, along with payment protection insurance, which is designed to cover debt repayments in case of illness or redundancy.

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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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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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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 Bank of England is widely expected to keep interest rates set at 0.5% for the sixth month in a row when it announces its decision later today. It is also tipped to maintain its programme of quantitative easing - pumping money into the economy to stimulate growth - but is not likely to extend it.

Though the Bank conceded that there is evidence to suggest Britain is emerging from recession, it warned that recovery is not guaranteed, and that it could take months for the full impact of its policies to be felt.

Last month the Bank’s Monetary Policy Committee (MPC) surprised markets by increasing its quantitative easing programme by £50 billion to create up to £175 billion on the UK’s balance sheet, with three of its nine members, including Bank of England governor Mervyn King, voting for an even larger increase.

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The RBS-NatWest banking group has announced it is slashing its overdraft charges, going against the grain of the rest of the industry.

The move comes ahead of a decision of the new Supreme Court on whether or not the Office of Fair Trading (OFT) can regulate these charges.

From 1st October, customers who bank with RBS or NatWest will be charged just £5 if a cheque bounces. Previously the banks levied a charge of £38. In addition, the fee for paying an item on an overdrawn account falls to £15 from £30.

The RBS-NatWest banking group is currently majority owned by the taxpayer.

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Barclays has lodged an appeal against threatened limits on the sale of the controversial Payment Protection Insurance (PPI).

PPI is supposed to cover loan repayments if the holder is unable to work due to an accident or illness or if they lose their job.

In January the Competition Commission passed a ruling to prevent lenders from selling PPI alongside credit cards, loans and mortgages from October 2010. Instead they must wait seven days before contacting customers to sell them the cover.

In March Barclays lodged an appeal against the ruling, which is currently being heard in court. The bank argued that the ban is not justified by the evidence collected as part of the Competition Commission’s investigation.

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Building Societies say that new regulations proposed by the Financial Services Authority (FSA) will make it difficult for them to compete with High Street banks.

Proposals from the City watchdog include restrictions on riskier types of lending by building societies, such as high loan-to-value mortgages for borrowers with small deposits and by-to-let mortgages. The FSA also wants building societies to employ specialist senior managers to oversee any riskier lending.

The Building Societies Association (BSA) says that the proposals would hinder industry growth. It has made a formal submission to the FSA following a consultation period on the watchdog’s plans.

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Complaints about banks have soared in the past two years, reflecting customers’ growing dissatisfaction with poor service and hefty bank charges, the Financial Services Authority (FSA) said today.

FSA figures showed a 122% increase in complaints about banking and loans, from 608,620 in July 2006 to 1.3m in June 2007. This included a 259% increase in complaints about overcharging, and a 71% increase in those about poor customer service.

However, the number of complaints decreased in the second half of 2007 and 2008 following the FSA’s decision to allow banks to postpone dealing with complaints relating to unauthorised overdraft charges until a court case regarding their unfairness is resolved.

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