Banks lose PPI Judicial Review

[CliveH]

Good news for the average consumer - bad news for the banks.

 

http://www.bbc.co.uk/news/business-13128692

 

We had one client that on a £10K loan paid over £11,000 in PPI premiums over the loan period!

 

Anyone who got stung by this should still flag it up with their bank or credit card provider - but this judgement is so more far reaching than what was expected in that the Judge has told the banks that they cannot just react to those that complain - They have to go back and review every case where it was added onto a loan.

 

This is excellent news as those of stick by the rules and run a tight shop have for years been spitting feathers over how the Banks get away with bad advice.

 

[Symbol Owner]

Thank you Clive, for drawing our attention to this important matter.

My old employers for the last twenty years, the National Association of Citizen's Advice Bureaux, (nowadays just "Citizen's Advice") Fought long and hard over this, we 'foot soldiers' were regularly reminded to highlight and refer upwards all abuses of PPI that our clients reported to us, as a 'social policy' issue.

It is good to see that the campaigns ( and those of others like yourself, Clive, I am sure) finally bore fruit -- but what a length of time people have had to wait for a just resolution! -- and still the b----y banks will squeal and appeal -- just you wait and see!

 

Thanks again Clive,

 

Cheers,

 

Colin.

[CliveH]

 

Thanks for that Colin - much appreciated.

 

These policies were awful - usually sold to the unsuspecting with little chance of them ever paying out.

 

Not unusual for us to come across employees who had guaranteed sick pay (NHS Nurses were particularly vulnerable it seemed to me) and of course these PPI plans only paid out if your income stopped. So if you were an NHS employee with 6 month full pay and 6month half pay when sick then a PPI plan would never pay out because the benefit only lasted for a year starting from the date of your illness!

 

They say this could cost the banks £billions - GOOD!

 

Perhaps (wishful thinking????) such Judicial action will force them to adopt better advice standards.

 

[602]

They say this could cost the banks £billions - GOOD!

 

Hi,

 

No it won't! They will just have to give back the money that they shouldn't have had in the first place.

 

Oops, I forgot about the commissions that have been paid to salesmen, bonuses, and dividends. Which brings me back to my argument that commission should be paid as the profit trickles in, not in anticipation of future profits.

 

If a salesman sells me a loan package, he should get a percentage of each repayment. The situation should not arise where you want to repay the loan early, and you find that you have to pay the FULL salesmans commission.

 

602

 

 

[602]

They say this could cost the banks £billions - GOOD!

 

Hi,

 

No it won't! They will just have to give back the money that they shouldn't have had in the first place.

 

Oops, I forgot about the commissions that have been paid to salesmen, bonuses, and dividends. Which brings me back to my argument that commission should be paid as the profit trickles in, not in anticipation of future profits.

 

If a salesman sells me a loan package, he should get a percentage of each repayment. The situation should not arise where you want to repay the loan early, and you find that you have to pay the FULL salesmans commission.

 

602

 

 

[BGD]

So perversely, that'll be less bank profits, so less dividends paid to shareholders, so less return-on-investment for anyone who has a savings pot which includes equities; and less prospective pension for anyone with a defined contribution pension scheme; also lower investment returns for any funded Final Salary scheme, which will mean greater Employer contributions, which will increase pressure for the Employer to close the scheme.

 

Oh, and less profits to have to pay Corporation tax to HMRC too, so less money available for the Public Sector, including NHS, Education, etc etc etc.

 

In the end, private sector profit is not a bad thing.......because that's what pays for everything else.

[Dave225]

I would not be as forthright as 'BGD' but I agree with many of his sentiments in as such that we will all pay one way or another. The banks are not reknowned for being philanthropic and so any money they are forced to return will be recovered somewhere else. Also do note they are planning to appeal the decison, so it is not cut and dried yet.

[Guest Tracker]

It won't cost the banks a penny because the same people who always pay will end up paying - those customers who are unable for whatever reason to stand up to the banks and who just have to pay whatever charges they choose to apply and accept diabolically dreadful rates of interest on , in some cases, very large ammounts of savings capital.

 

Strong, knowledgeable and powerful customers will pay nowt as ever was and will continue to find new and better homes for their cash!

[Syd]

Are you saying that because of these consequences the banks should be allowed to continue to behave like the crooks that they plainly are.

It may be that these refunds, if they ever take place, will be spread out by the banks to such an extent that they will never notice them.

 

It is about time the banks were hit and hit hard all this bulls**t about leaving the UK, where are they all going to go, I do not believe they would leave this country

 

[CliveH]

A couple of points if I may

 

Firstly the issue of the Banks leaving the UK concerns their Investment Arms – the bit of the banks that made the cock up over toxic loans in the USA (mainly mortgages to those who had not a hope in Hades of keeping up the payments) – These divisions of the “Banks” also create wealth by investing (properly!) in our industry, infrastructure etc. as well as providing investment capital worldwide - so it would be a bad thing for these arms of the banks to leave the UK as the worldwide profit generated currently comes into the UK. If they move, then the new banking centre will benefit and the UK will lose out.

 

Interestingly – these Investment Banks initially were based years ago in New York and the US authorities made the mistake of making it too difficult for them to stay and so they moved – to the City of London and make no mistake! – the UK has benefited greatly from their being here.

 

So watch out! – if we were to do the same as the US authorities then the investment arms would move – to possibly Singapore, China (Hong Kong is especially attractive to them already) – the options are wide and varied.

 

Secondly – this Judicial Review was concerning the Retail arms of the UK Banks. There has been much talk of late of “ringfencing” or placing a “firewall” between the investment arms and the retail arms of the UK banks so that it is possible for the Investment arm of a bank to go under without affecting you and I as that banks retail customers. So this judgement tells us that not only did the banks investment arms have a dodgy section that ended up costing us a great deal, but the Retail side of those same banks – who tried to make out they had done nothing to create the Credit Crunch – had over many many years been selling crap products over the counter in every high street in the land.

 

From where I stand, this judgement underlines exactly what a lot of us in the financial world have been saying for years. And that is that the retail arms of the banks are guilty of the vast majority of the misselling of financial product in the UK.

 

Even the Financial Ombudsman Service now publishes the data that proves this to be the case.

 

So from where I stand – I welcome the judgement because it lays specific responsibility on the retail arms of the banks to go back and review every sale they made of PPI regardless of the customer making a complaint or not. POWERFUL JUDGEMENT!!

 

This in itself is going to be a very expensive exercise and will tie up staff for years most probably. And then, if current statistics are correct the payout for the resulting misselling identified will sit on top of this cost.

 

So the Judge went much further than expected – such was the nature and power of the evidence of systemic misselling placed before him.

 

As I see it the Banks will not now be able to do what they have done before when caught out, simply react to the complaints when they come in and then figure out another scam product to mis-sell to the public.

 

If they know this is going to hurt and that if they do it again it is going to hurt just as much then we should see them clean up their act.

 

Thirdly – this judgement should (?) stop the ambulance chasing firms that prey on people to make a complaint in return for a slice of the compensation pot.

 

Fourthly – I have as yet not seen any details as to who will oversee the exercise. My view is that given their history – strong and tough oversight of the exercise will be required.

 

[602]

Hi,

 

I was referring to commissions, bonuses (boni?), and dividends ALREADY paid.

 

But I agree about "Who gets hurt if we all sue?" I have had the same (non-specific) thoughts about suing my council. They pay my claim, and put up my rates to compensate. Come to that, if you win YOUR claim, they will increase MY rates. Similarly with other public organisations. Now ...... if we could sue the Head Honcho, that might concentrate a few minds.

 

602

[CliveH]

Fair points

 

And I most certainly agree that in Local Government, Banks and in fact any “institution” – individuals should be responsible for their actions. The larger the institution, the more easy it is to “hide” ones actions it seems.

 

Another reason to use small business with a good reputation via word of mouth that make it clear to the customer what the charge for a service will be, I would suggest!

 

The biggest issue we find is the here today gone tomorrow nature of bank advisers.

 

[Syd]

Well put Clive but can I ask you one question

 

Have we really benefitted by as much as they have cost us because we the worker bee's dont seem to see much of the money

[CliveH]

Hi Syd

 

Have a look at this from Wiki - gives a reasonable overview

 

http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom

 

 

[nightrider]

Thanks Clive,

You're the man, one of the the only one's I take notice of on this group, good job you dont charge for your info.

[BGD]

CliveH - 2011-04-23 8:35 AM

 

Hi Syd

 

Have a look at this from Wiki - gives a reasonable overview

 

http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom

 

 

 

 

 

 

I thought this was the most telling (chilling?) piece of info in that link from Clive about the UK economy:

 

 

 

 

Year Tax Debt

 

1985/6 44% 43%

1995/6 43% 38%

2005/6* 46% 40%

2009/10 57% 68%

 

(These data show the tax burden (personal and corporate), and national debt as a percentage of GDP.)

 

 

 

[Guest pelmetman]

I thought this figure to be interesting :D

 

] As of June 2010 there were approximately 6,051,000 public sector employees in the UK (compared to approximately 23,107,000 private sector employees).[

 

I wonder what proportion of the 23,107,000 have a final salary pension when compared to the 6,501,000 (?)

 

Also what the average income is between the two sectors :D

[CliveH]

BGD - 2011-04-23 2:20 PM

 

CliveH - 2011-04-23 8:35 AM

 

Hi Syd

 

Have a look at this from Wiki - gives a reasonable overview

 

http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom

 

 

 

 

 

 

I thought this was the most telling (chilling?) piece of info in that link from Clive about the UK economy:

 

 

 

 

Year Tax Debt

 

1985/6 44% 43%

1995/6 43% 38%

2005/6* 46% 40%

2009/10 57% 68%

 

(These data show the tax burden (personal and corporate), and national debt as a percentage of GDP.)

 

 

 

Oh Yes! - it most certainly is chilling.

 

 

8-)

[Syd]

Thanks for that Clive

I'm getting into Gold and Silver now

 

By the way I have not forgotten, there has been a one year delay

 

[nightrider]

Syd - 2011-04-24 8:53 AM

 

Thanks for that Clive

I'm getting into Gold and Silver now

 

By the way I have not forgotten, there has been a one year delay

Syd,

I'm getting into lead and copper now, I broke into 3 empty council houses and stripped all the copper piping out then I stripped all the lead flashings off the roof, lead and copper bringing good prices at the moment (lol)