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BBA continues to defend PPI sales

The British Bankers’ Association is continuing to defend the way banks sold payment protection insurance, despite recent uproar over widespread PPI misselling.

Speaking at a Which? conference on financial services reform in London this week, BBA executive director of retail Eric Leenders set out why the trade body launched its judicial review into PPI redress measures, a case it lost in April.

Leenders said: “This is a classic area where we felt we had complied entirely with what was required. That is not just based on our internal risk, compliance and legal assessments, but the external advice we received as well. 

“Those risk and compliance departments have been involved in conversations with the regulator since 2001 to make sure the paperwork and documentation was correct. To then say 10 years down the track ‘this is how it should have been done and you should have known’, puts the industry in a very invidious position.”

But Independent Commission on Banking member and former Ofgas director general Clare Spottiswoode said: “It is absolutely outrageous in my view that the banking industry can defend introducing the PPI product on the basis they did all the paperwork and complied with all the regulations.”

She added although large fines have been levied on banks as a result of PPI misselling, the fines do not equate to the large profits banks made by selling PPI.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Victor Meldrew 28th June 2011 at 9:48 am

    Clare Spottiswoode seems confused. In one breath she says the product is bad and the next that it has been badly sold. It could of course be both but the banks would appear to be only contesting some aspects of their sales process, the documentation and on that basis you might have some sympathy for them when retrospective standards are applied. There can be no sympathy, however, for the sales methods that were used and no excuse for the regulators over the years not identifying them and stopping them. But can somebody tell me what is wrong with the product, a short term payment protection vehicle, even the Competition Commission is not banning it only prescribing how it can be sold. If this is the case perhaps somebody can tell Ms Spottiswoode to get her facts right before making any comment.

  2. That really says it all about the Banks, does it not ? Courts, Government, FSA, Independent Investigations all condem the mis-selling of PPI with loans, etc. by the Banks – and they still claim that they did nothing wrong because they were cleaver at fudging the paperwork to their own advantage. . . . . . and these are the group of bankers who are wanting to provide more “Advice” to the public ? ? ?

  3. This just shows you how out of touch the BBA and their riduclous spokeswoman are with the population of the UK.

  4. The name “Payment Protection” has now been so poisoned in the eyes of the public that many people who could be helped by buying this protection will not now even consider doing so. Some IFA’s have ceased advising Clients to buy this protection for fear that they are thought of as being part of this scandal.

    Sadly the protection industry has not seen fit to explain that the mis-selling of PPI was done by banks and secondary lenders and yes sadly by some mortgage brokers. We have been a PPI Product Provider since 1995, distributing our products via IFA’s, and have NEVER seen a mis-selling complaint upheld against an IFA in all those 16 years.

    A huge part of this scandal was the sale of Single Premium PPI, where five years premiums were paid upfront, to provide 5 years cover, but then because this premium was added to the loan and itself attracted interest, was then paid for over up to 25 years. Commissions of 60%+ were a huge incentive to some, yet no-one has ever presented a single credible benefit to a Client of pre-paying PPI premiums. These policies benefited the vendor, not the person paying the premium. Who, in their right mind, when taking out a mortgage with all the extra expense of establishing a new home, would actually think, let alone say “I don’t want to pay £22.50 per month for this cover, with the right to cancel it at any time, instead I prefer to add a further sum to my mortgage and take on an extra commitment of paying a further amount per month with no opportunity of cancellation for the next 25 years. Oh, and yes, I realise that if I move home the cover is not transferable, and if I redeem the mortgage there is no refund for the cover I no longer need.”

    Of course, the protection industry has also failed to address the fact that these Single Premium PPI policies were provided by Insurers. What benefit did they think the Client enjoyed from these, that could not be provided by a regular premium policy ?

  5. Clearly all banks and bankers are bad….So, 200,000+ people in the UK have been going to work for years intent on misleading the rest of the population. They all conspired to commit a huge fraud, they also had time to create a financial crisis. Isn’t it about time the debate was a bit more balanced. Did the bankers press gang innocent consumers into taking mortgages, did they get the thumb screws out….The root of the problem is that our pension funds demand great returns, these shareholders demanded stella profits on our behalf, we were all happy to enjoy the good times. The answer includes self restraint (borrowing) and more honesty and responsibility (not band wagon claims management companies).

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