Britain's costliest consumer banking scandal may have sting in its tail

[Jonathan Fairfield]

Britain's costliest consumer banking scandal may have sting in its tail

Iain Withers, Sinead Cruise

 

FILE PHOTO: People look out onto the Canary Wharf financial district in London, Britain August 11, 2019. REUTERS/Simon Dawson/File Photo

 

LONDON (Reuters) - Britain’s most costly consumer banking scandal could yet have a sting in the tail even after an August 29 compensation deadline, as a 1 billion pound claims industry takes its fight to the courts.

 

The payment protection insurance (PPI) saga is due to close on Thursday after eight years and 36 billion pounds of compensation payouts to consumers who were mis-sold policies on a vast scale.

 

But banks have been warned that PPI has created a burgeoning claims industry and that celebrating the end of the scandal could be premature.

 

Several claims firms told Reuters they would continue to pursue PPI payouts through the courts, while others re-train staff to seek compensation for mis-selling of other products including investments and high-cost credit.

 

“People may have thought the deadline would be the end of it, but it may not go away,” said Ian Bond, a director at law firm Talbots Law who works on PPI claims.

 

Think tank New City Agenda last week estimated the total bill for PPI would top 50 billion pounds, or five times the cost of the London 2012 Olympics.

 

It also estimated billions of pounds would likely remain unclaimed, leaving fertile ground for claims firms to exploit.

 

Britons could scarcely have missed reminders of the PPI claims deadline after being bombarded by adverts fronted by actor-turned-U.S. politician Arnold Schwarzenegger, paid for by watchdog the Financial Conduct Authority (FCA).

 

PPI policies were sold alongside a personal loan or mortgage to cover repayments if borrowers fell ill or lost jobs but most were sold unsuitable policies and would never have been able to claim.

 

Most people have sought compensation directly with their bank, but a sizeable industry also emerged to handle claims.

 

Ten of the largest claims firms employ more than 3,000 people between them and have amassed 1.1 billion in revenues over the claims period, according to Companies House documents.

 

Some banks have been caught out by a late surge in PPI claims, forcing Lloyds, HSBC and the UK arm of Spanish bank Santander to set aside an extra 1.1 billion pounds collectively in half-year results.

 

Others, including Clydesdale Bank and Barclays, are likely to make further provisions once the full bill is known.

 

Tony Shields, co-founder of claims firm Crystal Legal Services, is determined to pursue banks through the courts long after the PPI deadline.

 

He says the number of claims his firm dealt with this month leapt to 70,000, up five-fold on a typical month, with most on behalf of charities or families left money by people who have passed away.

 

“If you think about the deceased market, the people who have passed in the last 30 years of the scandal ... it’s widely recognised that executors should have been checking the estates of those folks for PPI,” Shields said.

 

THE NEXT SCANDAL?

 

The banks have mostly been contrite about their PPI sins but frustrations with claims pushed by middle-men are clear.

 

Barclays Finance Director Tushar Morzaria said in July that claims firms were “swamping the bank with vexatious claims.”

 

The FCA said last week some claims firms were using misleading and unfair advertising practices to win business.

A spokesman for banking trade association UK Finance advised anyone with a complaint to deal directly with their bank.

 

Claim firms say they have cleaned up their act and some have moved on from PPI to pursuing claims in other areas.

 

Michael Jordan, development manager at Goodwin Barrett, said customers were becoming increasingly aware of rights to compensation on loss-making investments, particularly if risks were inadequately explained or the client’s judgement was impaired for any reason at the point of sale.

 

Dr Jasmine Murray and her husband invested 50,000 pounds in an investment portfolio offered by Abbey National - now part of Santander - shortly after relocating from London to Reading in southern England.

 

Murray had hoped the investment would top up their income as they got older but it lost 6,000 pounds in value, prompting them to withdraw their remaining 44,000 pound investment.

 

“We were both in shock and the bank didn’t give us any good kind of explanation,” she told Reuters. “They just said ‘No, that’s it, you knew what you were getting into’.”

 

Murray used claims firm Goodwin Barrett, which argued Santander did not adequately explain the risks of the product. Murray obtained a payout of 13,590 pounds, of which 5,708 pounds went to Goodwin Barrett.

 

A spokesman for Santander said: “We have apologised to Dr Murray over the advice she received in 2006 and paid appropriate compensation.”

 

The experience left Murray, who was widowed in 2014, with a deep mistrust of banks.

 

“I use them because I can’t do any better. But I just feel people like me who need a little bit of handholding - they don’t look after us.”

 

-- © Copyright Reuters 2019-08-28

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[from the home of CC]

the world's full of suit wearing sociopaths ready to slit your financial throat and never lose a moments sleep over it... 

[Justgrazing]

H A P P I .. And a lot of folk are ..

[kingdong]

thats what happens when you employ second hand car salesmen as "financial advisors"

[kingdong]

33 minutes ago, from the home of CC said:

the world's full of suit wearing sociopaths ready to slit your financial throat and never lose a moments sleep over it... 

and the vast majority of them would appear to be "remainers"

[kingdong]

took out an endowment mortgage in the 80s on advice of building society manager. one year paid in £480 to find £48 had been put in my fund,went to the fsa ,took them on and won

[loong]

14 hours ago, Jonathan Fairfield said:

Murray used claims firm Goodwin Barrett, which argued Santander did not adequately explain the risks of the product. Murray obtained a payout of 13,590 pounds, of which 5,708 pounds went to Goodwin Barrett.

Maybe the next round of claims will be about the extremely high commission rates.

[soalbundy]

11 hours ago, kingdong said:

and the vast majority of them would appear to be "remainers"

I doubt that, remainers want to abide by the strict financial rules of the EU, the Brexiteers would rather the Anglo-American way, 'put an Englishman on a spit and you will always find another Englishman willing to turn it'

[dabhand]

Nice little earner for some of the ambulance chasers.

 

https://www.theguardian.com/money/2019/aug/24/ppi-claims-female-directors-millions-profits