“If you
refuse to let them go, I will bring locusts into your country tomorrow. They
will cover the face of the ground so that it cannot be seen. They will devour
what little you have left after the hail, including every tree that is growing
in your fields.”
God sent the plague of locusts to persuade the pharaoh to release
Moses and his people from slavery in ancient Egypt. Even His people can’t have
welcomed their arrival, as they would have been the first to lose their rations
in any ensuing famine. But it was a price worth paying as the locusts, along
with a series of other nastiness, got them out of slavery. If only Pharaoh had
been more reasonable it would never have been necessary. Pharaoh brought the
locusts onto himself, his country, and his victims. The plague of claims management companies has been brought on by
the actions of the banks and the inactions of the courts and regulators.
Locusts are far from the first choice solution for the banks' Payment Protection
Insurance (PPI) thieving. However considering the alternative choices it becomes apparent that Claims Management Companies are the worst possible option except that of doing nothing and letting the banks keep the money:
- Best Choice: Banks not ripping us off in the first place:
PROBABILITY OF SUCCESS NEGLIGIBLE, so long as excessive pay tempts in
bankers who need excessive profits to pay for their excessive pay.
- 2nd Best Choice: When caught in a rip-off the banks should find the people they ripped-off and compensate them. Banks know who they are because they have been taking money from their accounts every month for years.
- 3rd Best Choice: FSA forces the banks to find the people ripped off and compensate them.
PROBABILITY OF SUCCESS NEGLIGIBLE: with its “light touch approach” the FSA
has traditionally seen us Britons as the rightful prey of financial companies. The FSA's "light touch" is the touch of stunning tongs applied to a lamb's head before slaughter. Not much sign that its successor the FCA will be any different.
- Way down the list of choices: Claims management companies rip the ripped-off money back:
The alternative to this plague of claims management companies
would be the banks getting away with almost all of their ill gotten gains. The banks, represented
by the British Bankers Association, fought hard in the courts to avoid having to compensate victims who did not complain.
Knowing that most Britons would find the complaints process too cumbersome and
would either not complain at all or give up at the first hurdle of rejection of the complaint by the bank (customers who didn't give up and actually went on to appeal against the bank's rejection overwhelmingly won their cases in front of the Financial Ombudsman). According to
the Financial Ombudsman, by October 2012 just one in ten people sold PPI had complained.
An illustration of how financial companies felt secure in not
having to repay ripped-off monies can be seen in how the banks have drastically
increased the money put aside for compensation. Lloyds optimistically set aside £3.2 billion in May 2011, but had to add a further £2 billion by November 2012. Who can doubt that claims management companies played a part?
Another example of getting away with the proceeds of ripping-off the 'uncomplaining Briton' came in November 2012 when the FSA
imposed its largest retail fine on a company for selling protection against credit card fraud and identity theft. The FSA accepted the culprit’s estimate
that just £14.5 million would need to be paid in compensation out of total
sales of £844.8 million. Details of this scam in the FSA's report expose a litany of sales-scripted
fibbing that would make few sales untainted. And yet less than 2p in the pound
has been budgeted for compensation! How long before the locusts scent a meal
here too?
Did the banks know PPI was a rip-off? According to the Competition
Commission report banks were seeing fantastic profits from PPI. A return on equity (RoE) of 490 percent, compared to a normally healthy RoE of upto 20%.
A 490% rate of return is only otherwise seen in back-street muggings,
where the cost of cleaning bloodstains off your hoodie is a small fraction of
the cash in your victim’s purse.
Had the banks kept the ripped-off PPI profits, that would have further encouraged them to continue perpetrating rip-offs. Banks will not voluntarily hand back their ill-gotten gains, even when they know who and where the victims are.
Jailing a drunk driver will not restore the health of his victims, but it may dissuade him from drink-driving again. Using a claims management company may not get you back all your money, but it may dissuade banks from trying a similar scam again. Better for banks not to rip us off. Better for victims to make their claims by themselves. But failing that, better for the locust claim managers to take a chunky commission and the victims to get the rest, than for the finance industry to simply pocket the cash with renewed confidence that they can dream up and get away with the profits of other scams.
(For more advice from the consumer organisation Which? on Claims Management Companies and how to claim without them, >>click here<<
For more positive stuff about locusts (high in protein and good to eat in stir-fries; good for aches when steeped in coconut oil with chanting in pidgin Latin) click on the UN's Food and Agricultural Organisation site >>here<<)
Had the banks kept the ripped-off PPI profits, that would have further encouraged them to continue perpetrating rip-offs. Banks will not voluntarily hand back their ill-gotten gains, even when they know who and where the victims are.
Jailing a drunk driver will not restore the health of his victims, but it may dissuade him from drink-driving again. Using a claims management company may not get you back all your money, but it may dissuade banks from trying a similar scam again. Better for banks not to rip us off. Better for victims to make their claims by themselves. But failing that, better for the locust claim managers to take a chunky commission and the victims to get the rest, than for the finance industry to simply pocket the cash with renewed confidence that they can dream up and get away with the profits of other scams.
(For more advice from the consumer organisation Which? on Claims Management Companies and how to claim without them, >>click here<<
For more positive stuff about locusts (high in protein and good to eat in stir-fries; good for aches when steeped in coconut oil with chanting in pidgin Latin) click on the UN's Food and Agricultural Organisation site >>here<<)
BBC Reports:
ReplyDelete"Lloyds has admitted shortcomings in the handling of complaints at a centre set up to deal with PPI mis-selling.
It comes as an undercover reporter at the Times said staff at one of the bank's complaints handling centres had been taught to "play the system".
The reporter said he was told to ignore possible fraud by Lloyds salesmen and that most complainants would give up if rejected the first time."
http://www.bbc.co.uk/news/22851346