PPI costs hobbling banks

The mushrooming cost of paying  compensation to victims of Payment Protection Insurance mis-selling is leaving banks with inadequate resources to absorb possible future losses.

The Bank of England's governor, Sir Mervyn King, warned today that banks needed to raise more capital, partly because of the PPI bill which has reached nearly £13bn and is expected to rise higher.

A statement from the Bank's Financial Policy Committee said UK banks have "underprovisioned for costs for conduct redress, notably for payment protection insurance mis-selling."

"In 2012, the number of identified conduct issues has grown and it seems likely that banks could face additional sizable costs."

The Committee said that likely losses on bad loans and over-optimistic calculations of capital adequacy were also to blame for the fact that banks had too little set aside to be sure of coping with future financial problems.

Double the Cash ISA limit

The UK's biggest building society is calling on the Chancellor to allow a huge increase in the amount of tax-free cash that savers can put in Individual Savings Accounts.

There is no tax paid on the interest earned from ISA savings.

In the run-up to the Chancellor's Autumn Statement next month, Nationwide Building Society says the annual cash ISA limit should be doubled to £11,280.

Along with other building societies, Nationwide believes that a big boost to cash ISAs would allow first-time buyers to build up larger deposits - and it would help savers, especially pensioners and those close to retiring, who are worried about paltry returns on their savings.

Currently, you can save £5,640 a year in a tax-free cash ISA, but you can put aside twice that -- the full £11,280 -- in a stocks and shares ISA.

Nationwide said it is renewing it's call for equal treatment of cash savings, because many people prefer the security and flexibility of standard savings accounts to the unpredictability of stockmarket investments.

More info on Cash ISAs.

You can stay with Lloyds

The 4.6m Lloyds customers who are having their accounts moved lock, stock and barrel to the Co-op are likely to be pretty confused about their options.

They'd be hard put to work out from the letters and leaflets being sent out to most of them from this week that they can opt out if they want to - and stay with Lloyds.

All they are told about that in the letter is:

"If you’d like to speak to someone about these changes, please call us on 0800 028 0428 – lines are open from 8am to 8pm Monday to Friday and 9am to 5pm on Saturdays and Sundays – or ask in branch."

And in the accompanying leaflet:

"If you think that you could be adversely affected by this change, you can send formal written objections – known as lodging written answers – to the Court at Parliament House, Parliament Square, Edinburgh EH1 1RQ, United Kingdom. If you wish to send a formal objection, we recommend you seek independent legal advice. Any objections you have must be lodged with the Court by 22 February 2013."

In fact, as I understand it, Lloyds TSB customers who ring up or go into a branch to object will be able to put themselves on a register of people who want to opt out.

Then, some time early next year, when the sale to the Co-op is closer to being signed and sealed, they'll be told about a formal mechanism to keep their business with Lloyds, even though their branch is being sold.

So why isn't Lloyds up front about this? It seems straightforward enough. If you don't want to be shovelled into another bank, surely that ought to be your choice?

The reason is likely to be that under the rules of the sale, laid down by the European Commission, Lloyds must not encourage its customers to stay.

If a large number objected, Lloyds would keep too big a share of the market and the branches would be worth less to the buyer.

And of course, both Lloyds and the Co-op must be concerned that once customers start to think about which bank they prefer, they might decide to switch to yet another bank.

But there is a serious danger that a misunderstanding will arise. Some people may think they don't have a choice when, in truth, they do.

Millions of Lloyds customers on the move

Millions of customers of Lloyds TSB will start receiving letters from the bank from tomorrow morning, telling them that their accounts will be moved to a new bank owned by the Co-op. It's the result of an order from the European Commission requiring Lloyds to hive off hundreds of branches.

Three and a half million Lloyds TSB customers will receive the letter between now and Christmas. Although the deal was announced in the summer, it's the first time they will have been told officially by their bank that their accounts are to moved.

They'll stick with the same branches in a new banking operation to be called TSB, but owned by the Co-operative Bank which will become a more more significant player in financial services. Their account numbers and interest rates will stay the same.

In the letter the customers will be told that they can register their wish to stay with Lloyds, either by phone or in the branch. However, they won't need to make a final choice until next year.

The hiving off of 632 Lloyds TSB and Cheltenham & Gloucester branches, along with a total of 4.6m customers, was required by the European Commission after Lloyds benefited from a bailout from the taxpayer during the financial crisis and emerged from the turmoil with a huge share of the market.

How Lloyds describes the timetable:


Step 1
Branches, accounts and customers that will be part of the new bank are selected.

Step 2
We are here.
Legal move to Lloyds TSB Scotland plc – the branches and accounts that are included will be brought
together under one banking licence.

Step 3
If you have debit and credit cards, another step in the preparation is to send you new ones – they will
still be Lloyds TSB cards and work in the same way.

Step 4
When everything’s together under one licence, the business will be renamed as TSB Bank plc.

Final step
By the end of 2013 TSB Bank plc will transfer to a new owner.

For more info and list of branches affected, look here.

Rainy day fund for floods

The flood fund - how it would work.

Insurers are proposing that the government should back a special insurance fund to cover flood-related home insurance claims from the 200,000 properties at greatest risk.

These are the homes they warn will not get insurance from July next year unless ministers agree to a deal.

It would be the ultimate rainy day fund, to include:

*a levy which matches the amount currently creamed off from everyone's household policy to pay for flood victims, perhaps £8 each from up to 25 million homes - so roughly £200m a year.

*an additional premium from the 200,000 most risky homes, whose owners pay more for cover - each additional £500 brings in an extra £100m.

*a guaranteed interest-free overdraft from the government to cover crisis years, when there isn't enough in the fund

The first two elements can be imposed by insurers. It's the last one which is the big sticking point with the government.

The fund is a bit like a sinking fund and at the moment it's been sunk  - not just because there is a potential bill for the taxpayer but because that bill could be open ended.

Why? The reason is that if we have more years like 2007 when insurers had to fork out £3bn to deal with flood damage, the fund itself would be inundated and overwhelmed.

How could the overdraft be paid back then? It would hard to hold homeowners to ransom with swingeing extra premiums, so the state might be forced to meet the bill.

If that happened, there would be pressure to move directly to an openly state-guaranteed safety net, as they have already in the United States and some other EU countries.

So, while insurers argue that any overdraft in the fund would be returned over time, it seems the idea is seen in Whitehall as a slippery slope.

Remember that it's hard, and usually impossible, to get a mortgage on a property which doesn't have insurance - including cover for flooding.

So, unless a deal is struck, there's a danger that hundreds of thousands of homes could became unsellable except to cash buyers.

New pension ideas "full of holes"

Britain needs new-style pensions which cut costs for employers but provide workers with guarantees on the retirement income they're likely to get, according to a discussion paper from the Department for Work and Pensions.

It suggests that companies which have offered generous salary-linked schemes might cut out annual inflation increases for future members, remove benefits for spouses, or limit pensions for employees who leave for a job somewhere else.

On the other hand, employers who provide the most basic schemes, which provide no promise of a particular level of pension income, could look at confidence-building improvements. They could guarantee that members would at least get their contributions back or guarantee a level of return, in exchange for a fee.

From this autumn, the government is forcing companies to enrol staff in workplace pensions, but the Pensions Minister, Steve Webb, said people's trust in the system needed to be restored so they don't opt out and they "get the most out of what they put in".

But one leading pension consultant who has looked at the ideas commented that they are "full of holes".

John Ralfe said there was "no magic money tree and no fantastic solutions". 

In his view the paper misleads people by suggesting they can buy a guarantee for their savings returns and that this guarantee would cost very little. 

Companies, also, would baulk at the cost of providing any extra guarantees.

He added that people had to reconcile themselves to working longer, retiring later and saving more.

Lowest pay in Britain

Torridge in Devon has the jobs with the lowest pay in Britain, according to this year's snapshot of earnings from the Office for National Statistics.

Typical pay in Torridge was £348 a week for full time work in April, 3.5% higher than last year.

It compared with £917 in the highest paid area, the City of London - where pay had fallen 5%..

In Scotland, lowest median pay was in East Renfrewshire, at £398 a week, and the highest was £574 in the centre of the North Sea oil industry, Aberdeen.

Highest in Wales was £503 in Flintshire and the lowest: Blaenau Gwent with £382 a week, down nearly 4% on last year.

Savings rates collapsing

Savings rates have started to "collapse" as a result of a government scheme to encourage lending, according to the financial information service, Moneyfacts.

The £80bn Funding for Lending Scheme (FLS), which allows lenders to borrow from the government at cheap rates, has reduced their need to raise funds from savers.

"The immediate knock-on effect has been the collapse of savings rates across easy access, notice accounts and fixed bonds," according to Sylvia Waycott from moneyfacts.co.uk.

"And the devastation hasn't been limited to just the providers who have joined the FLS."

The highest paying instant access savings accounts for someone depositing £10,000 is down from 3.2% in August to 2.5% now, with the average rate dropping below 1%.

Moneyfacts says that the average one year fixed rate account is down half a per cent to 2.24% since August. Average interest rates for Cash ISAs and notice accounts have fallen as well.

No further interest rate cut

The Bank of England's interest rate setting body, the Monetary Policy Committee, has ruled out a further cut in the Bank's base rate "in the foreseeable future".

This is from the minutes of the latest MPC meeting:

"37 The Committee also discussed the likely effectiveness of reducing Bank Rate to below 0.5%.Over the past few months, Bank staff had consulted with the FSA and the Building Societies Association on the possible consequences.  In the light of that, the Committee had re-examined in detail the desirability of such an option.  While it would be beneficial for some existing borrowers, there were concerns that a cut in Bank Rate might prove counterproductive for aggregate demand as a whole.  Staff analysis had concluded that a further cut in Bank Rate would be likely to cause a reduction in the profitability of some lenders, especially building societies, because of the prevalence of loans with interest terms contractually or closely linked to Bank Rate.  That would weaken their balance sheets and they might have to respond by increasing other loan rates or restricting lending. Viewed against the backdrop of the Funding for Lending Scheme (FLS), and the potential for building societies to play a material role in increasing lending, the Committee judged that it was unlikely to wish to reduce Bank Rate in the foreseeable future."

Thanks to Save Our Savers for pointing this out...

8 payday loans, £7,000 in debt

The Office of Fair Trading says payday lenders aren't checking whether customers can afford to pay the loans back. Here's an example...

Meggan is 21 and £7,000 in debt to payday lenders. She first started taking out payday loans when she was just 19. She's had 8 and is still trying to pay off 4 of them.

Why did you start taking out payday loans?
"I felt I wasn't getting paid enough from work. I didn't have enough money left over at the end of the day to go out with friends, to go shopping, day trips, holidays...so I took payday loans to cover the cost."

How easy was it?
"Really easy, just go online. I just sit on my phone half the time, just type into Google: payday loans. Just click on each one, find out the one where you pay back the least, hopefully, then just apply. Bank details, passport number, driving licence, that's it.

I spent half the year with a really bad credit rating and they obviously didn't check because I had the money within an hour sitting in my bank account."

What were the signs with you that they shouldn't have been lending to you?
"Defaults mainly, missed payments, late repayments of credit cards, storecards."

They should have seen all of those things?

"Mobile phone contracts, late payments on those - they should have all shown up.

I think they should have done further background checks just to make sure, checked your employment, checked your bank status, just generally check your credit rating to see that you do pay back and to measure the amount that you've got going in and coming out by the end of the month.

It was quite hard, it was difficult opening all the letters, threatening defaults, threatening to take me to court, threatening  bailiffs. It was quite scary, being quite young as well, not always being at home, being away with the job. I would come after being away finding letters from 3 or 4 weeks, opening them and saying I don't want to read these."

You borrowed the money, didn't you?

"I borrowed the money so it is fully my responsibility to pay the money back. However, the contract's not always as clear as it might be and they're popping up on TV adverts here and there just making you think I'll just have a look, just apply, it can't do any harm. But you don't read the interest rates - the interest is sky high."

How badly does it affect you?
"The stress is quite hard, obviously opening the letters, and worrying constantly. Sometimes I'd go to sleep and think oh no I got to pay this one and that one and I've got to borrow money to pay that one. You just lay there late at night worrying  - what if a bailiff comes round, what if I get a CCJ? Where am I gonna get the money from, what will I do on payday?

There should be harder credit checks, especially for a young person as well. Not many young people are earning a good wage to be able to take payday loans out here, there and everywhere. So they should be credit-checking properly, thoroughly, as well as full background checks. It shouldn't be instant within an hour. 60 minutes isn't enough to check on somebody that they're worthy of borrowing anything from £100 to £1,000."

If you need help dealing with with payday loans, National Debtline is a good place to start.

Gongs for giving

Business people should have to prove that they have given significant sums to charity in order to qualify to be considered for honours, according to a business group which has been asked by ministers for ideas on increasing charity donations.

It would mean that honours such as OBEs and knighthoods for senior business figures would become directly dependent on individual charity giving.

The proposal is that business men and women would have to give time or money to charity consistently to be considered for honours, and their nominations would have to be backed by a letter from a senior person in the charity concerned, such as the chief executive.

At the moment there's no requirement to show a record of personal donations, although in some cases the company's track record of giving is used to try to justify receiving an honour.

The business group behind the idea, called Legacy 10, was asked by ministers for recommendations to encourage people to give to charity in their wills - and they've already persuaded prominent business figures including Richard Branson and Charles Dunstone, the Vodafone founder, to pledge support.

The hope is that if entrepreneurs and industrialists are prompted to give regularly, they'll be more likely to make legacies to charity as well.

Multinationals and UK tax

In the light of  all the fracas over Starbucks, Google and Amazon paying minimal corporation tax, it's interesting to read how the tax people at HMRC justify their record on collecting tax from multinationals - and acknowledge how Amazon, for instance, is simply exploiting the current rules by accounting for its huge UK sales in Luxembourg...

"Non-resident trading companies which do not have a branch in the UK, but have UK customers, will therefore pay tax on the profits arising from those customers in the country where the company is resident, according to the tax law in that country. The profits will not be taxed in the UK. This is not tax avoidance: it is simply the way that corporation tax works.

Most major economies operate corporation tax in the same way as the UK, so UK-resident companies are treated in a similar way in other countries. In other words, UK companies do not pay corporation tax to another country on the profits from sales in that country, unless they trade through a branch based there. Instead, they pay corporation tax in the UK."

Farepak complaint

A formal complaint has been filed against the international accountancy firm Ernst & Young and one of its auditors in connection with the collapse of the Christmas hamper company, Farepak, in October 2006.

The disciplinary body for auditors, the Financial Reporting Council, alleges that Ernst & Young failed properly to consider the effect of certain "post balance sheet events" after it signed off the company's 2005 accounts in early 2006.

It also alleges that the firm failed properly to consider Farepak's ability to continue as a going concern, amongst a number of charges.

Ernst & Young will have a chance to answer the allegations at a tribunal hearing next year.

The firm said "We obviously take these matters extremely seriously, but it would be inappropriate for us to comment further before the Tribunal".

The FRC can take disciplinary action against its members but the case will not directly affect the amount of compensation paid to Farepak customers.

Card insurance mis-selling

This is the really sneaky part of the mis-selling of card protection policies by insurance firm CPP, with the apparent connivance of certain leading banks - known as CPP's "business partners".

Here's extract from the FSA's findings:

3.12.
Some business partners “introduced” their customers to CPP by affixing a sticker to the new credit or debit cards sent to their customers. The sticker prompted the customer to call a number (which was actually CPP’s) either:
(1)
to activate the card, known as “card activation”; or
(2)
to confirm that the customer had received the card, known as “safe receipt”.
3.13.
When the customer did call the number CPP also used the conversation to offer Card Protection and/or Identity Protection.

CPP sold the policies directly to hundreds of thousands of people, the banks to several million (making 4.4m policies in all).

If you're worried that you might have been mis-sold a card protection policy or identity theft insurance, either by CPP or by your bank, you could wait to be contact by them.

CPP is about to start contacting the the ones it sold to directly.

Or you could make a complaint directly to your bank or to CPP. Then they'll have to deal with it.

Cold weather = high gas profits

Felt cold in the spring and early autumn? That's one reason why SSE (formerly Scottish & Southern) turned in a higher profit.

This is what they say in their half year results:

"Earning a sustainable profit in Retail

• Return to profit in Energy Supply mainly due to significantly higher household gas consumption arising from colder weather

· Average GB household gas consumption up 27.9%; electricity consumption up 2.8%

Operating Profit in Retail, 6 months to 30 September
2012                                                                      2011
Energy supply £48.7m                                           (£133.7m)
Energy-related services £27.0m                              £32.3m
Retail segment operating profit  £75.7m                 (£101.4m)

The increase in consumption was in response to below average temperatures during the six months to 30 September 2012 compared with the same period in 2011, when the temperatures were above average.  According to the Met Office April in 2012 was the coldest since 1989 and September in 2012 was provisionally the coldest since 1994."

SSE's latest price increase kicked in during October, so didn't affect these profit figures.

Stamp rises on the way?

When will the price of a stamp go up again?

When asked about putting up the price of First Class stamps today, Royal Mail's chief executive, Moya Greene, said: "It would be improper of me to give assurances on price."

The point is that Royal Mail now has the freedom to set whatever First Class price it wants. It went up from 46p to 60p in April.

Ofcom still controls 2nd Class, 50p at the moment, and has laid down that this can't rise above 55p (plus inflation).

Royal Mail's return to UK profit today lifts the pressure to raise prices a bit.

On the other hand a business with £3.6bn in revenue over just six months will be looking to make even more than the £99m operating profit reported for the half year to September.

The fact that a public sale of Royal Mail is pencilled in for next year will only spur them to boost income, to try to make the business look more attractive.

So brace yourselves for more stamp prices rises in the spring.

Daily postbag shrinks

The number of letters delivered each day by Royal Mail has shrunk by 4 million since last year.

The drop comes as email extends its hold, and families have to contend with higher stamp prices and financial pressures.

The daily postbag contains 54 million items, down from 58 million this time last year.

The figures emerged as Royal Mail revealed its financial results for the six months to September.

They featured a turnaround from UK losses of £41m in the UK last year to operating profits of £99m this time.

The total volume of letters of the six months fell by 9%, though letter revenue was up 2% - or £44m - following April's rise in stamp prices.

First class stamps went up from 46p to 60p, second class from 36p to 50p.

As genuine letters decline, junk mail is taking over the typical postbag. Marketing mail is approaching half of all letters.

The number of unaddressed letters and fliers has actually been rising.

Not so keen to take your home

The number of home repossessions has fallen to the lowest level since before the financial crisis, in 2007, the result of lenders keeping families in financial trouble in their homes.

A total of 8,200 properties were taken into possession by mortgage lenders in the three months to September, down from 8,500 in the second quarter and 9,600 at the same time last year.

A hallmark of the credit crunch and economic downturn has been the willingness of lenders to show forbearance with their customers.

It means banks and building societies can put off the heavy cost of dealing with a repossessed home and families can stay put.

Some survive by paying only the interest on the loans. In other cases the lender extends the length of the lending period or allows a payment holiday.

While repossessions have fallen, the number of homeowners in serious arrears, worth 10 per cent or more of the loan, is running at nearly twice its pre-crisis level.

The City watchdog, the FSA, has warned that the extent of forbearance could be disguising the scale of problems experienced by families under financial stress.

It's estimated that between 5 and 8 per cent of all mortgage borrowers could be benefiting from forbearance.

It is one reason why repossessions are running at an annual rate of around 35,000, compared with over 75,000 during the slump in the housing market in the early 1990s.

House prices plummet 33%

Let's face it: house prices are down by a third.

That's good for first time buyers and people looking to trade up.

Not so good if you're using the housing market as a way to make a profit or as a substitute for a pension scheme.

The Halifax reports that the average house costs £158,426.

At the peak in August 2007, the average was £199,612, so the drop in cash terms is 21%.

But we've had lots of inflation since 2007. So there is a double impact: your house is worth fewer pounds and your pounds are worth less in the shops.

Adjust the 2007 house price for the change in the Retail Prices Index and you'll see that the real drop is even greater.

It's 33%.

Is pay 62% higher?

Do you feel like you are being paid 62% more?

That's the claim from the latest official stats which relate that the average hourly wage is 62% higher in real terms than in 1986.

Cash wages are more than three times as much - the percentage rise form the ONS is arrived at by adjusting for the impact of prices rises or inflation.

But whether you were already in work then, or started later but compare yourself to workers of the time, few of us feel that much better off, do we?

There are several explanations for the "we're paid paid more but it doesn't feel like it" effect.

One is that the years we remember best, the most recent ones, have been tough and wage-sapping.

Most of us are being paid less in real terms than before the credit crunch and financial crisis - in other words, since about 2007.

Inflation has outstripped wage increases and some people's wages have stood still or fallen in cash terms.

Another reason is that we spend more on things which seem necessary now but were deemed luxuries in 1986 or hadn't even been invented yet.

I'm thinking holidays, but also pay TV, mobiles and computers.

A typical family might have several mobile phones. That's a totally new cost.

Of course, all this new spending and new goods and services have expanded the economy as well. The whole thing is bigger. It makes us look like a richer country.

Finally, you can slice and dice these numbers in different ways and get different results.

The Office for national Statistics gets to 62% by using the Consumer Prices Index or CPI, the headline measure of inflation, to show the real buying power of wages in different years.

Well, why not? It gives a nice heart-warming result.

The more traditional measure, the Retail Prices Index or RPI, tends to be higher. So adjusting for RPI would have the effect of reducing the real increase in wages over 25 years.

Interestingly, the ONS is consulting on a different way of calculating RPI which would produce a lower figure - but that's another story.

Pay gap widens

Earnings increases for higher paid professions such as pilots and engineers have outstripped the lower paid by a wide margin since 1986, although workers have seen increases across the board.

Official figures show that the top ten per cent of employees have benefited from an 81 per cent rise in earnings, adjusting for the impact of price rises, while the bottom ten per cent have seen their wages rise by 47 per cent, widening the gap between the highest and lowest earners.

The very highest paid, the top 1 per cent, have enjoyed a rise of 117 per cent in real terms.

The Office for National Statistics says the average hourly rate of pay was £3.87 in 1986. In April 2011 it was £12.62, more than 3 times as much. But it emphasised that, taking price rises into account, average wages were up by 62%.

The minimum wage has improved the situation for the lowest paid - such as waiters and bar staff - who have seen their wages go up by 51 per cent since 1998, compared with 30 per cent for the richest earners.

£1bn blow to small businesses

Thousands of small businesses could find it impossible to buy new vehicles and equipment after a market leader in providing finance announced it would pull out of the UK.

The Dutch bank, ING, has decided to close down Surrey-based ING Lease UK, which had been pumping over £1bn a year into the British economy.

Farmers, office-based firms and transport companies have been turning to leasing contracts, as bank loans and overdrafts have become harder to obtain.

ING is the leading source of leasing finance via brokers. Its withdrawal removes as much as 40% of this money at a stroke.

Under a lease arrangement, the broker arranges the purchase of the equipment, which is owned by the leasing company. All the business has to do is keep up the regular payments.

ING has already announced the sale of its UK savings business, ING Direct, to Barclays. It has been off-loading assets to repay the Dutch government for aid received during the financial crisis in 2008.

But the withdrawal from leasing also shows how banks across Europe are being prompted to slash some activities because of new rules forcing them to hold more capital in reserve.

The 300 staff at ING Lease's HQ in Redhill were told last week that half of them were likely to lose their jobs in the near future, with the remainder kept on to help run down the business.

This year 31% of total investment in new machinery and equipment has been paid for through leasing contracts, so the ING closure will cause months of disruption. It is likely to put a squeeze on this sort of finance for a great deal longer.

Competitors, including Investec Bank, Aldermore and Close Brothers, have promised to do what they can to fill the gap. But insiders say the best hope is that they will come up with half of the money needed.

Last year the leasing business provided £22bn to help keep British industry running, many of the deals done direct between banks and large companies. On that measure, ING Lease accounted for 5% of the market.

However, it specialised in the smaller end of the business: farms and young firms which got in touch via specialist brokers.

It's these customers, wanting essentials such as tractor attachments, computers, desks and commercial vehicles, which will bear the brunt of the loss.

Astonishing PPI figures

Many are saying that the mis-selling of Payment Protection Insurance or PPI has turned into the biggest financial scandal in UK history.

The figures are staggering: £12.7bn is already set aside by banks and other firms to compensate their customers, but there are predictions that this will rise to £15bn or even higher.

So what is actually happening out there?

By a rough calculation, banks are sending out 10,000 payments or cheques a day, with typical payments averaging around £2,750.

That means nearly £30m is being shelled out daily to the growing ranks of customers who lost out and have made a claim.

At that rate it would still take a further 9 months to distribute all the compensation money which has been set aside.

If the claims keep coming in and banks have to provide more money, which seems highly likely, it will take more than a year.

The number of customers who have been paid compensation has probably already risen above 2.5 million.

Who knows what impact this will have?

It's welcome news for anyone who gets a payout. Some will save it, some will spend it.

Not so brilliant from the taxpayer's point of view, though, because two of the biggest PPI offenders (Lloyds and RBS) are partly state-owned.

And potentially it's not great for people and businesses looking for loans. The less banks have in their coffers, the less they can lend out.