9 May, 2011 – 21:13 Economics
Author: Rhodri Evans
The big banks have (9 May) just admitted defeat in a long-running battle over “payment protection insurance”.
In effect, they have conceded that they swindled people to the extent of at least £8 billion (the sum they have so far put aside to cover compensation), in around 16 million separate cases.
The banks would rather not have conceded. But, as the Financial Times reports, £8 billion is “small in the scheme of bank profits”. And the bank bosses responsible for the swindle go forward unscathed.
People taking out loans, credit cards, or mortgages with banks were tricked into buying “payment protection insurance” (PPI). They paid extra on the loan repayment, and in return, supposedly, got insurance which would keep up their repayments if they fell ill or lost their jobs.
PPI schemes were sold to people who, because they were self-employed or already had medical problems, could never have claimed the insurance payments. 24 of the 41 companies investigated by the magazine “Which?” included the insurance automatically when customers applied for personal loans, so that people were sold it without knowing they were buying it.
And even when the PPI buyers could claim, and knew they were buying PPI, they were sold extremely bad deals. They could have bought insurance much cheaper elsewhere.
It’s another “one law for the rich, another for the poor” story. The unemployed person who claims a little more than the rules allow gets full-scale reprisals.
The bank bosses swindle away, take it for granted that some swindles will get caught out and cost them compensation, and merrily continue.