Blog: The day I fell victim to the PPI scandal

PPI fiasco

First, Anon below points out that Bob Diamond is CEO of Barclays. Well, yes, but then the author didn't say otherwise. Second. Exactly what is the Regulator doing about it? What's that you say? I only caught the bit about Adams and Sweet.

Posted by: Neil Shillito

MY experience

Like the above I organised a car loan when my firm changed from company cars to a monthly allowance and did my research, applied for the cheapest deal on the high street, and low and behold the quote for the loan had PPI included - now as an educated IFA I knew I had not requested or agreed to this - it was just added as a matter of course - and for good measure it was added to the loan over 3 years with interest charged on it - the extra payments would have totalled some £3400 over the life of the loan. When I phoned to query it they said 'Oh we just add it to every loan for your protection'. AW it was just being done for my benefit - what a nice bank. When i said I actually felt I neither wanted or required it the nice bank became a nasty bank and they tried to imply that the interest rate on the loan would increase without the PPI - the whole thing was a joke. Eventually they re-issued the papers without PPI but it took ages - if we behaved like that with our clients I wonder what the FSA would have done??

Posted by: Paul jones

Unbelievable

"The nice chap from HSBC told me it was cheap, easy to set up and would mean if I fell ill or had an accident, I would not have to pass my overdraft debt on to my family or fiancée. It made sense (sort of) and, by signing up, it also meant I could get the salesman off the phone. Dinner was getting cold" So you admit you understood the product, you knew what you where doing BUT because your dinner was getting cold you decided to buy it. Thank god you are not one of my clients. You don't deserve compensation as you are an idiot.

Posted by: Swanny

Perfect summary

Perfect concluding statement: "You can switch ‘get them wrong' in that statement to ‘get found out'...."

Posted by: Peter Chadborn

Compo Culture

I went into a car showroom last year and the salesman talked me into several extras on my new pride & joy. Never used any of them since and they cost me a grand. Totally accept it is my fault. Totally accept I cannot get my £1,000 back. Why is it then in matters financial services journos and others such as here can decide to spend their money to get someone off the phone and then get to claim they fell victim. It is absolutely correct that the vulnerable should be protected from predatory salesmen but where one draws the line is far less clear cut than the c £7bn blanket compo we are about to see here.

Posted by: Simon Webster

Who Pays?

Small point. The 'banks' won't pay this. Their customers will. And in the case of the two nationlised banks, even if they claim that they will not pass on the cost to customners, we will still pay as taxpayers as the profits and dividends we receive will be reduced. These 'banks will pay compensation' lies must stop. The mad regulatory money go round is a joke, a bad joke. And for the avoidance of doubt I, along with most other IFA's spotted this scam happening yeras ago. In my case it was when I went with my wife at her request to discuss a bank loan. The PPI was automatically added as a lump sum premium and I hit the roof. I told the clerk that if I caught her or her bank doing that to anyone else I knew ever again there would be consequences. Stupid woman was just, well, stupid really.

Posted by: Steven Farrall (Adviser Alliance)

Well, thank you...

...Swanny. Lovely stuff. In all seriousness, the point I was trying to make (extremely vaguely, I will admit) is that the salesman was calling in the evening and being impossibly persistent. The product's basic premise isn't necessarily bad at all. It is just that I was young, naive and, well, gullible. In my defence, I cancelled the contract (which is a another blog in itself) within a matter of days, so I am not due compensation anyway. Now, about me becoming your client...

Posted by: Scott Sinclair

Dinner getting cold

Swanny - surely the dinner getting cold comment was simply journalistic licence to highlight the salesman's pressure tactics?

Posted by: pete wildebeast

Moneylenders

Anyone who expects financial advice from a moneylender deserves what they get...

Posted by: Ken Durkin

Covered or NOT

I make no apologies for the disgraceful sales methods adopted by the Banks. I too have had to fight off persuasive salespeople trying to sell me something I do not need or do not want. BUT - you decided to accept this cover. You knew what it provided and you agreed to meet the cost. Had you been unfortunate enough to fall ill in the intervening period you WOULD have mad a claim. In my view you have no right to any refund. You are merely jumping on the compo bandwagon. YES these plans were sold badly. They were sold to people who could never claim. They were addded without being requested. That does NOT mean that every single person who was persuaded to take one out was Mis-sold. In fact, I recall that on one occassion my Network (now SESAME) advised me that I was REQUIRED to add PPI to ALL mortgage applications or to get a disclaimer from the client. The Government of the day had just changed the State payments for Mortgages on Unemployment. Stating that Insurance Cover was available in the market to cover the first 9 months and tha the STATE would only step in thereafter. This is one of the factors which led to the automatic use of PPI in so many situations. Th ebanks merely took advantage. I am pleased to say that I have never recommended one. It is an overpriced poorly designed product paying excessive commissions to a range of intemediaries along an extended chain. I doubt that much more than 10% of any premium actually went to provide the cover. But that still does not entitle you to compensation.

Posted by: grosvenor

LTSB disgrace

As a previously tied agent with LloydsTSB I was horrified when at our daily sales meetings the personal account managers were told that less than 75% penetration on personal loan PPI would result in "training" (read punishment) meetings on a friday evening at 6pm at a diificult to get to branch in the City. It's no wonder PPI was mis-sold with the presuure put to bear on staff. Any manager who questioned the ethics was immediately castigated. They were also told that PPI WAS suitable for retired pensioners as it had death benefit, even though they couldn't claim on the unemployment/sickness. When I mentioned I could probably write much cheaper stand-alone lifecover this was dismissed as this would earn the branch much less in commission. Needless to say, as soon as these practices reached the regulated arm I left. They are now reaping what they've sowed and not before time.

Posted by: Richard Williams

Response to - Well thank You...

I do appreciate that, but I bet there was an element of truth in the statement. He was on the phone, so all he had to do was put the phone down, not agree to proceed.

Posted by: Swanny

Phew

Thank the Lord that you have Peter Chadborn to guide you through the maze of financial options

Posted by: Terry Lean

Swanny...

...I was naive, no question. The truth is I thought: 'It's only a tenner, maybe I will get ill, and if it will get this bloomin' salesman off the phone'. It was idiotic to sign up, and my approach today is to not even take the call, but I wasn't alone. A lot of people did as I did. What is interesting here, and it is a point raised by grosvenor (see 11:16), is that there is little wrong with PPI as a product and, in certain circumstances, it would be entirely appropriate. In my case, it wasn't appropriate but I admit there is a dual responsibility here: the bank should not be pressurising young people to buy products they do not need, and I should have known more and not been stupid enough to buy it.

Posted by: Scott Sinclair

Scott

Nice to see your watching. Client agreement, Initial disclosure letter, Data protection statement, Fee Agreement,factfind, Money laundering requirements and client welcome pack in the post for your attention. ;-) Swanny

Posted by: Swanny

Sales

In every other type of sales, if you agree to something and sign up to it, then you're stuck with it unless it doesn't do what the salemean said it would (and even then few of the cars I've bought have even done that.) So I wonder why then that people who have agreed to this cover and had valuable insurance in place, should have all their money returned. Society seems to reward stupid people at the moment and it may be time some people took responsibility for their own actions. Although in this case it's only because the banks pass their salesmen off as advisers and because of their total lack of integrity in the face of making money, that this windfall is possible. Integrity: you'd think the FSA would have that in one of it's principles for the banks, wouldn't you?

Posted by: MarkG

Tip of the Iceberg

PPI is being used by the regulator as an exemplar. They know (as we in the industry know) that banks have been ripping off their customers for years with all sorts of different product. It has been more difficult to prove and the range has been wide. PPI has been easy to nail and that’s why they have done it. The banks have finally rolled over on this because no doubt the regulator has warned them that they will lift the blanket higher to reveal even more maggots if they didn’t comply. It has to a degree already started to work. Barclays (one of the worst perpetrators) will now no longer offer advice from branches. From what I have seen from their misnamed Wealth Management arm (more like Poverty Creation for the customer and wealth creation for Barclays) it wouldn’t be a bad idea if they shut that down as well. The only real pity is that the nationalised banks of Lloyds and RBS are paying the fine out of what are effectively tax payer funds. Yet another example why the regulatory sanctions policy needs revising. The fines should be payable by individuals – or taken out of the bonus pool with the right kind of framework to ensure that it is not topped up from elsewhere. All we need now is for the MMC and OFT to bust the cartel charging usurious interest rates. (How likely is that at present, when the Government wants their loans to be repaid with interest?)

Posted by: Harry Katz

OK

Now this may soudn a bit weird BUT. 1. I agree with Harry 2. It is important not to loose sight of who is agent of who. If this was people acting as agents of their clients or claiming to do so (IFAs or independant mortgage brokers)and although there is (according to the FSA) no such thing as Independant Advice when if comes to general insurance (which this is). If Harry or I (as we hold ourselves out as being agents of our clients) and hence cannot make an undisclosed commission and we say we provide advice, we don't even need the FSA's stupid rules to know that we have broken the law (agency law) If however we are representatives of our employer (bank or insuer) and do not claim to be the agent fo the client, nor to be giving advice, but simpl informaiton for the customer (note I say customer and not client as there is a difference), then whilst what the banks do is immoral, it is not illegal, nor was it against FSA rules at the time. This is politics playing to the masses and whilst I might gloat at the banks being hit with these fines (as they are morally corrupt) and them withdrawing their fight, this is not good for anyone as it is anarachy....

Posted by: Phil Castle

Compo Culture and Cars

My experience with car salesmen is different from yours, Simon. I have never been talked into buying extras in a showroom. Rather, I have had to lead the salesman in order to get the extras I wanted. The exception to this is when the 'extras' are of a financial nature, e.g. extended warranties, insurance, special financing packages etc. What is it about finance? Perhaps the answer lies in how the goods are made, kept and delivered. Physical car extras can mean hassle for the salesman (not in stock, wrong or faulty goods etc.). With finance however, the problems are not apparent until much later and often have to be dealt with by another employee, not by the salesman. There again, maybe sales targets ignore physical car extras.

Posted by: Paul

no chance

First of all I would like to know why you think you were mis-sold this product? Obviously not the case as you knew exactly what you were having. Secondly, HSBC have not offered overdraft protection during this time.

Posted by: dan