UK banks just can’t stay out of trouble

Business banking news review: week ending 12 Sept 2013

This week it seems like the only news is bad news when it comes to the actions and behaviour of certain UK financial service providers.

First up is the much-maligned Ulster Bank, the RBS subsidiary operating in Northern Ireland, which has been in hot water for what seems like forever and a day. The Government has finally stepped in to launch a wide-ranging examination of the personal and business bank account provider’s operating procedures – actions that have led the bank to rack up some £1 billion in losses recently.

The inquiry is being run by the Northern Ireland Affairs Select Committee, and one of the possible punitive measures the committee is considering is spinning off Ulster from RBS in an effort to distance its parent lender from toxic levels of debt. Detractors say this could be disastrous for the economy in NI, considering Northern Ireland relies upon the bank for the lion’s share of its financial business dealings, but there are few other options that could actually effect any positive change in the region.

For what it’s worth, as bad as things in Northern Ireland may be, it could be worse; while the incompetence on the part of Ulster Bank is definitely a problem, at least there’s no outright fraud and duplicity. No, this particular dubious honour goes to two banks currently being chewed out by the Financial Conduct Authority for more or less ignoring a massive number of PPI complaints.

The aftermath of the PPI scandal is still raging, I’m afraid, and the fact that so many Brits were mis-sold insurance that turned out to be absolutely useless is only the beginning of the problem. The number of PPI mis-selling complaints have been on the rise, but the FCA – and the Financial Ombudsman Service – have been watching a trend that has seen more and more banks rejecting seemingly valid complaints, possibly in an effort to save on having to pay off on all these claims.

Just when it sounds like you can’t loathe banking executives any more than you already do, you read a story like this. It’s absolutely maddening to hear about how not only have banks been caught red-handed in mis-selling PPI to millions of Brits but now they’re refusing to own up to their mistakes by compensating those they have wronged – it’s enough to make you start stuffing your money in spare mattresses instead of depositing it in a savings account!

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