According to figures from the Financial Services Authority (FSA), the largest monthly payout was in December, when £441 million was awarded to PPI customers.

In total, £1.9 billion redress was paid out by banks to customers last year.

The regulatory body said that 16 unnamed firms, accounting for the majority of PPI complaints, had provided their redress data for publication.

PPI was sold to consumers on the basis that it would cover debt repayments if they were ever out of work.

However, the industry was found to have mis-sold the insurance policies when it was revealed that some customers would not have been eligible to make a claim had they needed to.

Companies shelled out £215 million in compensation between January and June 2011 to customers that had complained about how they were sold PPI.

Despite the increase in the amount paid out towards the end of 2011, Richard Lloyd, executive director at consumer champion Which?, said the £1.9 billion is less than a quarter of what lenders expected to refund.

‘Too many people are still finding the claims process too lengthy, the banks must streamline the process to make it easier for people to claim,’ Lloyd added.

Which? pointed out that the end of the legal process in May last year, which saw the High Court dismiss legal challenges to the FSA’s PPI measures, should have seen companies deal with the complaints in the second half of 2011.

The FSA has received more than 1.5 million complaints about PPI since it took over regulation of PPI in 2005, it revealed last year.

The FSA said that customers first began to query the extent of FSCS cover towards the end of 2008 but that it was not until January 2010 that Santander clarified the position.
 


In that time, the company sold approximately £2.7 billion of structured products, including £1.2 billion after June 2009, when it concluded that its Guaranteed Capital Plus and Guaranteed Growth Plan products would only be covered by the FSCS under ‘limited’ circumstances.
 


Santander has acknowledged that it could have responded by changing its product literature and training materials quicker in order to reflect the FSCS position accurately.
 

‘The fact that it allowed sales to continue with unclear Key Facts literature contributed to the seriousness of the breaches,’ the regulatory body said in a statement.
 


Tracey McDermott, acting director of enforcement and financial crime at the FSA, commented, ‘When firms provide customers with literature about products, the information has to be correct and unambiguous.
 

‘After all, it is there to help people make informed decisions about whether to invest.’
 


McDermott added that Santander should have moved faster to confirm the extent of FSCS cover, particularly as sales took place between 2008 and 2009, a period of ‘financial uncertainty’.
 

The FSA stated that it had found no evidence to suggest that the products were sold to customers for whom they were not suitable and noted that investors in the products had not suffered a financial loss as a result of the failings.

The company explained that instead of offering a set interest rate, the weekly rates on the two accounts will be set by taking the average of the best deals available elsewhere.

Investec will use the price comparison website Moneyfacts for the best deals from no notice accounts, notice accounts, internet accounts, monthly interest accounts, over 50s accounts and introductory bonus accounts.

The Investec High 5 Issue 2 Account will pay out the average of the top five rates from the Moneyfacts site, while the Investec High 10 Account will set its rate as an average of the top ten.

The rates will be reviewed every week, on Tuesday, and adjusted according to the rates on Moneyfacts.

The High 5 account, a six-month notice account, will start out with a rate of 3.17 per cent gross AER and the High 10 account, which has a three-month notice period, will start with a rate of 3.11 per cent gross AER.

Both accounts will require a minimum deposit of £25,000 and a maximum of £100,000 and interest can be paid monthly or yearly.

Investec claimed that, on the Moneyfacts website, there were 17 different accounts in the top five on a weekly basis between 5 October 2011 and 7 February 2012, with many accounts using bonuses to artificially and temporarily make their rates seem more attractive.

Linda McBain, head of banking at Investec Bank, commented, ‘Many of those accounts currently offering attractive returns are based on short-term bonuses which means savers often need to switch their balances once these expire.

‘With our two new accounts, clients know that they will always receive a competitive rate so they no longer need to chase the best returns.’

The change will reduce the rate to 1.5 per cent AER with immediate effect.

NS&I has justified the cut by claiming that it is on track to exceed the net financing target set for it by the Treasury each year.

The state-owned savings bank is allowed a maximum of £4 billion but is on track to hit £4.5 billion for 2011/12 and is reducing its rate to reduce deposits into the direct saver plan.

Jane Platt, chief executive of NS&I, explained, ‘Since November we have seen an increase in customer deposits.

‘This has been driven by a relatively small number of savers depositing large amounts of money, particularly into our direct saver account.

‘We have also seen a decrease in the number of customers withdrawing their money from products across our range.
 
She continued, ‘Reducing the rate on direct saver was a very difficult decision. However, we have to take action to try and moderate the level of deposits into this account over the coming months.’

Anna Bowes, director of savings advice website savingschampion.co.uk, dismissed the reduction in the NS&I account because savers should instead 'be looking for a new home for their money'.

She explained, 'The rate on this account was already shocking, as is the case with many NS&I products.

'This latest bit of news highlights the fact that the flight to safety is still rife, as savers look to the Treasury as the safest place to stash their cash. 

'However, the truth is if you split your cash to keep within the FSCS compensation scheme limits, there are far better rates to be found and your money will still be protected.'

Bowes directed savers to the Virgin Easy Access Saver account, provided by Northern Rock, with 2.85 per cent gross/AER as a much better option.

Net financing is a measure of the net change in NS&I funds, calculated by taking the net inflows, capitalised and accrued interest and prizes earned and subtracting the net outflows.

NS&I currently has net financing of 4.8 billion through the first three quarters of 2011/12 but expects a reduction in the final quarter.

Net financing reached £12.4 billion in 2008/09 but settled back to £1.6 billion in 2009/10 and £0.1 billion in 2010/11.

The survey of over 1,000 households in the UK by bank First Direct showed that 21 per cent have no savings at all to fall back on, while 7 per cent have savings of less than £250 set aside as a financial safety net.

Based on this figure, some six million households could not survive until the weekend on their savings pot, the survey claimed, as £250 is equivalent to three days average monthly household take-home pay.

With average monthly household outgoings currently £1,536, according to First Direct, these savings would last for five days.

Bruno Genovese, head of savings at First Direct, said the findings pointed to a ‘worrying lack of financial preparation’ in the UK.

‘With the current climate of uncertainty, it is of utmost importance that families are setting aside a realistic sum of money to be used in emergencies.

‘As a general rule it is advisable to have three months’ salary set aside in accessible savings for a rainy day,’ he added.

Of those polled, some 32 per cent admitted that they would be unable to cover their rent or mortgage at all if they were to unexpectedly lose their main source of income, while 11 per cent said they would use a personal loan or credit card in this instance.

A further 11 per cent would rely on their overdraft to pay for outgoings in the event of redundancy.

Genovese commented, ‘By putting away small amounts each month, Britons can help themselves build up an emergency savings pot as provision for any eventuality without having to rely on a solution that will get them further into debt.’

The regulatory body severely reprimanded the accountancy firm after a tribunal found that while it was auditor for JP Morgan between 2002 and 2008 it failed to notice that as much as £23 billion of client money had not been ring-fenced.

The executive counsel of the AADB filed a disciplinary complaint against PwC in relation to its role reporting to the Financial Services Authority (FSA) on the US bank’s compliance with its client money rules, which govern the segregation and protection of client money.

PwC accepted that its conduct had ‘fallen short’ of the standards expected when it wrongly reported to the FSA that JP Morgan Securities had maintained systems adequate to enable it to comply with the client money rules during the period.

According to a statement from the AADB, the tribunal found its misconduct in the case to be ‘very serious’ and fined PwC a record amount for an accountancy firm.

The AADB reduced the fine from £2 million for PwC’s cooperation.

The FSA imposed a £33.32 million penalty on JP Morgan Securities in May 2010 for its wrongdoing in the case, which was said to represent 1 per cent of the average amount of the assets that had been allowed to remain desegregated.

The Financial Services Authority (FSA) has fined Integrated Financial Arrangements, the parent company of wrap provider Transact, £3.5 million for failing to properly protect client money.

Transact, which offers independent financial advisers (IFAs) a tax-efficient way to hold their clients' money, held £508 million between December 2001 and June 2010.

Under FSA regulation, firms are required to keep client money separate in bank accounts with trust status. They should also perform daily checks to confirm the amounts correspond with their records.

After inspecting Transact in May 2010, the FSA found the firm had not performed the necessary checks, meaning client money was at risk if Integrated Financial became insolvent.

Tracey McDermott, acting director of enforcement and financial crime at the FSA, commented, 'Integrated Financial has committed a serious breach by failing to comply with our client money rules for a significant period of time. 

'The FSA has repeatedly emphasised the importance of ensuring that client money is adequately protected and in the past year has taken enforcement action against firms of all sizes for breaches of its client money rules.'

She added that firms can expect more regulatory attention in the future.

Integrated Financial agreed to settle at an early stage and so has qualified for a 30 per cent discount on the original fine of £5 million. The regulatory body confirmed that no clients lost any money.

Last month the FSA fined investment firm McInroy & Wood £15,000 for failing to properly protect client money.

The Financial Services Authority (FSA) has fined HSBC £10.5 million after a subsidiary of the high street bank, NHFA, gave inappropriate advice to elderly investors.

It is the largest ever retail fine handed out by the regulator, beating the £7.7 million issued to Barclays in January this year. HSBC will also have to pay around £30 million in compensation to wronged investors.

Between 2005 and 2010, NHFA advised 2,485 elderly costumers to buy investment bonds to fund long term care costs. The customers were either entering, or already in, long term care and were reliant on the bonds to cover their costs.

The FSA found that the investments were typically recommended for a minimum of five years but many customers had shorter life expectancies, forcing them to make withdrawals sooner.

The combination of withdrawals and product charges led to faster reduction of capital than should have been the case if customers had received the right advice, according to the FSA.

A review by a third party of a sample of customer files found unsuitable sales had been made to 87 per cent of customers involving these types of investments.

In a statement, the FSA said the failings were particularly significant due to the vulnerability of the customers, whose average age was 83, the number affected, and the sustained period of time over which it occurred.

NHFA was approaching a 60 per cent share of the long term care products market prior to being closed for new business on 1 July 2011.

Tracey McDermott, acting director of enforcement and financial crime at the FSA, said the fine should serve as a 'warning' to other firms.

'NHFA was trusted by its vulnerable and elderly customers. It breached that trust to sell them unsuitable products. This type of behaviour undermines confidence in the financial services sector.

McDermott added, 'HSBC, who owned NHFA, has now recognised the issues and taken steps to do the right thing. They have been given credit for that - but for some customers it will be too late.'

HSBC agreed to settle at an early stage, and is entitled to a 30 per cent discount on the original fine.

Researchers at rights group Which? reported that five out of 37 advisers in the banks and building societies surveyed provided what it considered to be sound investment advice. 
 

In a statement, Which? said that the majority of advisers demonstrated a poor understanding of the risks of investing and made misleading statements about the cost of available products.
 


Some 17 advisers recommended complicated and high-charging investment bonds, the group revealed, while four of the advisers failed to state that these came with large exit fees of up to 12 per cent if consumers wanted to get their money out within the first five years.
 

Of the 37 advisers, 18 claimed that there was no cost for their advice and the majority were not upfront about commission paid for the products that they recommended.
 

The company highlighted one example where its researcher was told by a Yorkshire Bank adviser to invest £50,000 in a bond, but failed to disclose that it netted them £4,400 in commission.
 


Executive director of Which? Richard Lloyd said that he wanted the Retail Distribution Review to force banks and building societies to be more ‘upfront’ about the cost of their advice.
 


The research also found that nearly half of advisers did not mention the Financial Services Compensation Scheme (FSCS).
 
Lloyd exclaimed, ‘It’s shocking to see such low standards.

It’s also disappointing to see that things haven’t improved in the past year, despite two high street banks being fined (Barclays in January 2011 and Bank of Scotland in May 2011) for advice failings and poor complaints handling.'

Advisers also reportedly made incorrect statements about how much protection consumers received, including a Santander adviser who told the researcher that its investments were covered up to £85,000, when the correct amount was £50,000, Which? said.
 

‘We are reporting our findings to the Financial Services Authority and urging the regulator to investigate and punish the worst offenders,’ added Lloyd.