Liverpool Victoria has received a fine of GBP840,000 because of serious issues with the way it sells PPI or Payment Protection Insurance.
It appears that the Banking Services arm of Liverpool Victoria was automatically adding PPI to personal loan quotations even though prospective customers had not asked for it. The good news for any customers affected is that the amounts taken will be paid back as soon as possible to the 14,500 customers who had money taken from them in this way.
The average cost the addition of PPI placed on each person with a personal loan is around GBP1,600, which is a considerable sum when taken as a percentage of the amount borrowed. Liverpool Victoria customers are sure to appreciate the windfall, as well as the apology that will go with it.
As the Moneyback Bank stood at the head of the best buy unsecured personal loan table critics were accusing parent company Alliance and Leicester of manipulation.
The offer that got the Moneyback Bank to the pinnacle was a 5.5 percent rate on an unsecured personal loan of GBP 5,000 over a three year term. However this headline rate is only for those borrowing exactly GBP 5,000. If a different amount is requested then the rate is completely different,with even a one pound difference prompting the rate to rise.
Visiting the website of Moneyback Bank there is a loan repayment calculator there showing a difference in repayments of around GBP 200 if the loan is for just one pound less, This is understandably seen as manipulation of the facts to achieve a promotional ranking in the highly regarded best buy tables though representatives of the bank have denied this is the case.
Looking at the base rate being held unchanged this week Legal and General are forecasting a difficult Summer for borrowers as lenders take a cautious approach.
It is the view of Legal and General, as well as many other observers, that financial institutions went overboard with lending when money was cheap and easy to get hold of. Now they are going overboard the other way by being ultra cautious when lending to anyone.
Consumers will hope that something shifts in the market to free up money to cover general living expenses in some instances, where people have borrowed to maintain a standard of living and can no longer gain access to credit. Legal and General are not expecting that to happen as the cautious approach is maintained.
