Finance banking insurance fresh information.

The Financial Services Authority has warned insurers that they will face millions of pounds in fines - unless they start handling complaints about endowments properly.

In a letter sent to the chief of larger mortgage endowment firms and financial advisers, the regulator told mortgage endowment providers not to use the Financial Ombudsman Service as an to handling complaints themselves.

Other stories in today’s programme

The history of banking in this country goes back to King Charles I who took the private gold deposited in the Tower of London. Since he walked off with everyone’s gold - people got nervous. They started giving it to goldsmiths to look after. Adam took a look at the evolution of the banking system.

Shoppers chose to stay away, or spend less, in the run up to Christmas than they did last year. But we hit the sales like there was no tomorrow. So what effect did this have on retail figures and why does it matter? Gillian, who has recently been released from Newsnight for good behaviour, gave us the answers.

The British fundraising effort for the Asian Tsunami is being co-ordinated by the Disasters Emergency Committee (DEC). So far, more than 76m has been pledged. But what exactly happens to this money and how can we be sure it will actually reach those who need it most? We talked to Pat Wilson of the DEC.

Millions have vanished from Turkish bank accounts. But it’s all above board as the government there has knocked six zeros off the Turkish Lira.

The life insurance company, Axa Sun Life, has lowered annual bonus payouts for up to 50,000 with-profits investors.

A petrol price war could break out in the UK after two leading cut the price of fuel. Asda announced it is shaving 3p off the cost of a litre of unleaded petrol - cutting the price to 76.9p.

The Financial Services Authority (FSA) said the General Electric UK subsidiary failed to adequately control insurance sales and to treat customers fairly.

PPI is a form of insurance that covers people in case they cannot pay loans as a result of illness or unemployment.

The fine is the biggest imposed by the FSA over PPI selling so far.

We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly SA director of enforcement Margaret Cole

The PPI industry is worth an estimated 5.5bn a year.

Watchdogs have been carrying out a investigation into the industry, and earlier this month the BBC learned that 10 banks and lenders would face fines following the probe.

Review

In a statement, the FSA said it had acted as GE Capital Bank had not reviewed its sales procedures, despite widespread evidence which emerged in 2005 that it was failing to meet recommended sales practices.

Failings pointed out by the FSA included:

• Not ensuring that customers had adequate before signing up for a policy
• Failure to make sure staff were trained properly
• Not monitoring or managing information properly
• Failing to contact customers that the bank found had been sold PPIs erroneously in an effort to remedy the situation

The bank has now agreed to take action to resolve the problems.

GE Capital Bank provides many of the store cards that people are offered in High Street shops. About 300,000 shop staff sell insurance for the cards on behalf of the company.

According to the FSA, more than 850,000 policies which included PPI were sold by GE Capital in 2005.

“Millions of people take out store cards every year. They need to know that PPI is almost always optional and should consider whether they need it before signing up,” FSA director of enforcement Margaret Cole said.

“Our focus on Payment Protection Insurance will remain very high this year. We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly.”

Gamze Gunoral, 24, left her aunt’s house in Totteridge, north London, on the morning of 7 July.

On her way to her language college in , west London, she died on a line Tube train near Russell Square.

Osman Hokelek, an at the Active Learning School, said: “This is tragic, really shocking. She was a lovely girl.”

Born in Istanbul and an only child, Miss Gunoral graduated from the University of Marmara, Istanbul, with a degree in insurance and banking.

She worked in the finance of Gisad, Turkey’s largest textile export company, and decided to come to London to improve her English.

Miss Gunoral had been a student in the UK since May and had just settled in and made some close friends, Ms Hokelek said.

She was looking forward to returning to Turkey with much improved English and better to continue her career.

Her mother took her body back to Turkey, where she was buried in a ceremony in Istanbul.

“We have opened the first pages of what will be a long and very sordid book,” said California insurance John Garamendi.

The probe began a week ago when New York attorney general Elliot Spitzer sued broker Marsh & McLennan.

Mr Spitzer alleges that Marsh took illegal payments for steering clients to firms.

Shares in Marsh, the world’s largest insurance broker, have collapsed since the Spitzer investigation was unveiled, and the firm is now renegotiating $2.8bn in bank financing.

This is going to be a long, long unhappy for the insurance industry John Garamendi, California insurance commissioner

Those of the companies alleged to have made the payments - including insurance giant AIG, Ace and Hartford Financial - have also suffered.

The firms concerned have said they will co-operate with the investigation.

Rules change

California has yet to identify which firms it will be looking into.

But Mr Garamendi made it clear that he was working closely with Mr Spitzer - and that his inquiry, already eight months old, would go beyond the corporate insurance which was the focus of the New York suit and into the consumer market too.

“The early is that it’s an extremely serious breach of trust,” he told reporters.

“Where (the investigation) leads we do not know. This is going to be a long, long unhappy situation for the insurance industry.”

California, the largest state in the US and by some measures the sixth largest economy in the world, has also tightened up its rules on how insurance is sold.

In the future, firms will have to disclose any money they get for selling a product.

Starting on 13 October, some 60 banks, firms and other financial will take part.

The exercise will look at a number of factors including how firms could cope with a greatly reduced workforce.

It was by FSA chairman Callum McCarthy in a speech at the Mansion House in the City of London.

‘Vital test’

Mr McCarthy said that government departments, health agencies and other experts were also involved in the simulation.

“I am confident that we will all learn much from this test - as we need to do,” he said.

“It is an area we would neglect at our peril, and we are determined not to allow this to happen.”

The announcement of the avian flu exercise came as Mr McCarthy said the UK’s financial services industry remained in good shape, but should never be about possible economic downturns over the horizon.

In a speech on Monday, Mr Prettejohn urged the FSA to force brokers to disclose the size of their commissions.

“The FSA should change, and change now” said Mr Prettejohn, who wants it to move from “disclosure on request” to mandatory disclosure.

The call came in a speech on improving the London insurance market.

Call for action

“The FSA should not bide their time and ‘wait and see’. They should seize the moment,” Mr Prettejohn, Lloyd’s chief executive said.

The FSA took over of the general insurance sector in January, but it sidestepped calls to require brokers to disclose the commissions they earn from insurers to their clients.

Last week, the City watchdog gave brokers and insurers guidance on managing conflicts of interest. Brokers must give information on their commissions if, and only if, their customers request it, the FSA said.

US probe

In the US, lack of transparency about brokers’ commissions has led to problems. The world’s biggest insurance broker Marsh & McLennan said last week it would pay $850m to settle charges, raised by New York Attorney General Eliot Spitzer in October, that it sought to rig bids in with insurers.

The probe centred around so-called commissions, whereby brokers were rewarded according to how much business they brought to an insurer, an arrangement that did not always benefit brokers’ customers.

All of the insurance business written in the Lloyd’s market is placed via brokers.