No UK banks failed the stress tests on this occasion, suggesting that banks in the UK have done a reasonably good job of repairing their balance sheets following the global financial crisis.

Of the eight which failed the stress tests, five are Spanish. Two Austrian banks and one Greek bank also failed their stress tests.

Failing the stress test means that the eight banks had a core tier one ratio, an important measure of financial robustness, below 5% over a two year time horizon.

In addition to the eight banks which failed the tests, another sixteen banks fell into a ‘danger zone’, with a tier one ratio of between 5% and 6%.

The markets have fallen again this morning, although this is likely to be in response to a worsening economic outlook in Italy rather than specifically due to the results of this stress test.

One thing is for sure; the European banking sector still has some way to go before it can be considered financially healthy.

Some banks will need further assistance from the state to restore their capital positions and many would be badly hit should we see defaults in Greece and other peripheral eurozone economies.

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The Ombudsman handled 206,000 formal complaints about firms in the retail financial services sector during their 2010/11 financial year.

Over 105,000 of these complaints were specifically about the mis-selling of payment protection insurance policies which were designed to stop borrowers from defaulting on their loan obligations.

The big four banking groups – Barclays, Lloyds, RBS and HSBC – were responsible for more than half of all of the complaint cases dealt with by the FOS.

The number of complaints received by FOS about investments fell by 30% compared to the previous year.

The fact that so many people have to resort to using the Ombudsman is a worrying indicator of how many financial services firms tend to treat their customers.

Not only are firms giving their customers cause to complain in the first place, but they are then rejecting such a volume of legitimate complaints that their customers have no option but to seek adjudication from the Financial Ombudsman Service.

This is however mainly a poor reflection on the banking sector, rather than independent financial advisers.

IFAs accounted for just 1.5% of all complaints made to FOS last year, which is an improvement on the 2% complaint rate experienced in 2009/10. Even this figure was skewed higher due to a large volume of formal complaints about one IFA firm in particular.

Looking at the individual types of complaints, IFAs were responsible for a quarter of complaints to the FOS about pensions and 14% of formal complaints about investments.

These figures show that, whilst there is still room for improvement in the IFA sector, your chances of receiving poor advice and then needing to use the Ombudsman are significantly lower if you use an independent rather than a tied or multi-tied financial adviser.

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This ruling could have a big impact on whether the banks have to pay compensation to millions of customers who were inappropriately sold these insurance products.

It is likely to mean that the banks will have to review all of their past sales of PPI.

More than 200,000 complaints about PPI sales have been made to the Financial Ombudsman Service (FOS), including around 100,000 during the past twelve months.

Three in four of these complaints have been upheld, which suggests that PPI was mis-sold by the banks on a massive scale.

What lessons can we learn from the PPI fiasco?

Banks are never the best entities to sell financial products. Their inherent sales cultures means they are focused on selling products to considers, with suitability and appropriateness coming as an afterthought.

Instead of selling insurance products and investments to their customers, the banks should stick to their knitting; the provision of retail banking services. A focus on these activities would see everyone better off.

The PPI fiasco also suggests that consumers need to be better informed.

Understanding when an insurance product is an optional extra, rather than a compulsory feature of a loan, could have prevented millions of people from unnecessarily spending their money on these products.

The Financial Services Authority, through what was the Consumer Financial Education Body and is now the Money Advice Service, has an important role to play here – with financial education needed to turn people into more knowledgeable and confident consumers.

It is always better to avoid buying an unsuitable financial product, rather than relying on the complaints and compensation system to receive redress in the future.

Assuming the banks do refund nearly three million customers for these mis-sold products, the end result could include the demise of ‘free’ banking. Of course banking is never really free; it is subsidised in part by the profits the banks make from selling products to their customers.

With so much money at stake, and apparantly little in the way of a collective reputation remaining to uphold in the banking sector, the PPI saga could drag on for some time before reaching its logical conclusion.

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Nick said that the old attitude that your bank would look out for your best interests needs to be replaced with a more questioning attitude.

‘You need to think there will be sales pitch it may be labelled as advice or financial planning but that person in front of you has got some aggressive sales targets,’ said Bamford, chief executive of Informed Choice. ‘You should always shop around and give yourself some breathing space to get a second or even third opinion. Don’t be sold.’

You can read the Citywire article in full here.

The only way to receive impartial and unbiased financial advice that is in your best interest (and comes without the product sale) is to speak to an independent financial adviser who operates on a fee basis.

This removes the need to sell a financial product to earn commissions and means they will focus on what is best for you.

There is a world of difference between independent financial advice and bank ‘advice’, particularly when the former is delivered by a professionally qualified adviser working on an impartial charging basis.

The latest information published by the Financial Ombudsman Service (FOS) seems to justify these warnings. Part of this was that only 2% of complaints made to FOS come from IFA clients. This was down from 3% the previous year.

A shocking 63% of FOS complaints came from the banks. General insurers, life assurance providers and investment managers were responsible for the balance.

However, it is not these numbers that give such great cause for concern.

FOS also revealed that one high street bank which has been targeting elderly customers with Investment Bonds, where it has upheld many similar cases where customers were not suited to the product.

Within the report, FOS commented:

“A particular group of cases involved a specific high-street financial institution that targeted the sale of investment bonds at older consumers. In these cases, the consumers were usually investing money for their retirement and frequently had little or no previous investment and savings experience beyond deposit-based accounts.

“The bonds concerned contained a degree of risk that prompted us to ask whether the consumers understood and were suited to this type of financial product. We upheld many of these cases in favour of the customers, as the financial institution was unable to persuade us that these consumers would have been looking for extra financial risk given their age.

“In assessing complaints like these, the individual circumstances of the consumer at the time of the sale are vital. It is evident that some businesses believe that giving us copies of the product literature – containing explanations of how the product worked – should be enough to convince us that consumers must have been aware of, and have accepted, the risk inherent in the product.”

Investment Bonds can be suitable products in some circumstances. It is important to consider both the underlying investments recommended as well as the tax position of the product.

To think that a high street bank has been actively targeting older clients with these products seems to make a nonsense of the regulatory requirement to ensure suitability, instead assuming that a one size fits all approach works.

Banks are mostly sales organisations, interested in selling financial products to their customers rather than providing professional unbiased advice on the best course of action.

This report should act as a wake-up call to any investor who is considering using their bank for financial ‘advice’, unless that is they want to risk being a statistic in a future FOS report.

Until very recently, Dubai was heralded as an international economic success story. It had experienced a major property boom and billions were being pumped into a variety of developments, all designed to turn Dubai into a trading and service centre for the Gulf region.

The bubble appears to have burst.

Yesterday a move by the State-owned Dubai World to delay paying some of its debt pile had a big impact on global stock markets. In the UK, the FTSE 100 index of leading company shares closed down 170.68 points (or -3.18%). Other world markets displayed similar behaviour.

It is important to note that Dubai World has not defaulted on its $22bn mountain of debt. At least not yet. What triggered panic in the markets yesterday was their intention to defer repayments for six months and the fact that their wealthy (oil rich) emirate neighbour Abu Dhabi did not step up back the debts.

Problems were compounded by the closure of the US stockmarket for Thanksgiving Day and a technical glitch at the London Stock Exchange (LSE), preventing automated trading for several hours.

The big question now is just how much exposure the British banks have to this increasingly bad looking debt. UK banking shares had a difficult day yesterday, with RBS, Lloyds and HSBC all holding syndicated loans for Dubai World.

Today could be ‘interesting’ for global investment markets. The Dow Jones is back open, but with an abbreviated session for stock trading. It is ‘Black Friday’ today in the US, traditionally the start of frantic Christmas season shopping. There is every chance that today could be renamed ‘Red Friday’ when markets open later.

This ruling will disappoint those banking customers who were hoping to reclaim billions in pounds in historic bank charges. It means that earlier court rulings allowing the Office of Fair Trading (OFT) to look into the fairness of charges on unauthorised overdrafts have been overturned.

The banks will clearly be happy with this ruling. They stood to lose around £2.6bn in annual income if the Court had ruled in favour of the OFT. If this had happened, one possible consequence would have been the end of ‘free’ banking for all bank customers.

Of course banking services are never really ‘free’. Customers who stay in the black might not face explicit charges for running their accounts, yet they do pay through low or zero interest rates and charges when they use other services.

The ancillary products and services on offer from the banks do not always offer best value, so they also profit from their customers who go direct rather than seek independent financial advice. This is particularly relevant when you compare the cost of the protection products and the performance of investment options on offer from the various banking groups.

The ruling this morning might not be the end of this long running saga. The OFT have said in the past that they would still try to use their other powers to launch a review if this court ruling went against them today.