Yet Another Face Palm Moment..This time - PPI

Here

Of course it bloody is.  The 'government' is entirely to blame for the (non) PPI 'crisis'.  As all of you may know, had you been keeping up at the back, that I have told you before that the bloody government, both itself and its agents, the equally failed FSA and FCA, TOLD the financial services industry to sell PPI. Yep, they TOLD us to sell it.

(Point of information.  We 'sold' about five, yes FIVE, PPI plans. Successful policyholder claim on one - by an owner director of a small limited company that failed. Yes really.  His own firm. Work that out.  No policyholder complaints on the others.  And in dealing with the compulsion to sell PPI on any personal finance business - mortgages in our case - we changed our standard wording in one of our client info documents so that we could demonstrate that we had 'talked about it' to the regulator - if asked  - and then just carried on treating our clients as adults).

What's more we told the Financial Shambles Authority that the whole PPI thing would end in tears.

And then there's the reg-yew-lay-shuns.  These enable, nay encourage, an entirely mechanistic approach to dispute resolution that bears no relationship at all to the due process of law.  Essentially the 'rules' deliberately enable arbitrary decisions, based largely on 20/20 hindsight, by capricious bureaucrats. (BTW, if you print out the FCA rule book it will stand eight and half feet high  - A4 double sided). The effect of this approach is to create a companion opportunity for exploitation by the less than scrupulous to create fake businesses to 'help' people pursue these claims.  Furthermore, when you get a tsunami of such claims it is far cheaper for the target institution to just pay up than to investigate and fight every claim.  We have evidence that claims have been paid where no PPI had actually been sold.  Also, getting £20+ Bn out of Bank capital is helpful to the government as it just gets spent. Never mind that it is a conversion of capital to consumption.  Anyway the government can just print some more money to re-capitalise its crony banks.

And then you have to take into account the whole Newspeak concept of 'mis-selling', of which there can be no such thing in a free society with personal responsibility.  The Bank is its own agent.  If you buy a product or service from a Bank, Caveat Emptor applies.  If you have doubts that you understand a financial or insurance product you can take professional advice.  That adviser is your agent and takes professional responsibility and has PI cover in case he makes a mistake.

And to back this up I can relate a small vignette that befell Mrs L and me.  Some years ago, soon after we were told to sell PPI, Mrs L asked me to go to her bank with her where she was sorting out a personal loan. I went through the loan documents and spotted that a single premium PPI plan had been automatically added. (Single premium plans paid a very large initial commission, from memory about 25% of the premium).  The premium was in the thousands of Pounds.  'What's this?' I asked. 'Oh', said the bank lady. 'That's the insurance. The government says you have to have that'.  'Erm, no it does not' Quoth I. 'Take it off Mrs L doesn't need it'.   'And two other things, bank person, one, this stuff is going to be the next scandal, and if I catch you forcing any more of my clients to have it I will be down your throats ASAP' (or words to that effect).

The whole PPI farrago stinks. It is a litany of massive government and regulatory failure.  We've known this for years.


Update.  My memory is slightly defective on the scrapping of mortgage interest benefit for the unemployed.  I think it might have been that the term for which it was available was limited , and that the qualifying rules were tightened.  And also that the actual rate was capped  (Here). And I found this, which is very useful.  I do, however stand by my assertion that we were told to sell PPI - or mortgage payment protection of some kind.