PPI

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Steve1956
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PPI

Post by Steve1956 » Fri Oct 18, 2019 12:14 pm

I've just been informed over the telephone I have another successful claim for PPI awarded to me,can anyone please explain how this works,some people,well the claims companies claim, people have got thousands in compensation for miss sold PPI,I've had about 3 successful claims before and received small amounts £10 .50 on one occasion,my question to this font of Knowledge forum is if I've been mis sold PPI I've been deceived ,why do the compensation payments give you such differing amounts,surely the amount should be a fixed payment for their misdemeanours.

TheFamilyCat
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Re: PPI

Post by TheFamilyCat » Fri Oct 18, 2019 12:19 pm

I thought the PPI claims deadline was in August?
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Steve1956
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Re: PPI

Post by Steve1956 » Fri Oct 18, 2019 12:22 pm

TheFamilyCat wrote:I thought the PPI claims deadline was in August?
It was yes but if your claim was in before the end of August they had to honour the claim.

Paulclaret
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Re: PPI

Post by Paulclaret » Fri Oct 18, 2019 12:23 pm

You're not getting compensation, you're getting a refund of your premiums, which were allegedly miss sold, plus interest. The majority of PPI sales were, of course, not miss sold, but it doesn't stop claims from those claiming it was!
Last edited by Paulclaret on Fri Oct 18, 2019 1:15 pm, edited 1 time in total.
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Herts Clarets
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Re: PPI

Post by Herts Clarets » Fri Oct 18, 2019 12:25 pm

I did one using the Resolver website relating to a credit card I took out over 20 years ago, to use for business expenses. Got a cheque for just over £2k last week.

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Re: PPI

Post by FactualFrank » Fri Oct 18, 2019 12:34 pm

This PPI crap can't end soon enough.
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TheFamilyCat
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Re: PPI

Post by TheFamilyCat » Fri Oct 18, 2019 12:36 pm

Steve1956 wrote:It was yes but if your claim was in before the end of August they had to honour the claim.
Sorry, misread the opening post; thought the call was a sales call saying you were entitled to a claim. Apologies.

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Re: PPI

Post by blackburnturfite » Fri Oct 18, 2019 12:47 pm

FactualFrank wrote:This PPI crap can't end soon enough.
When i am advised by family to try claiming off both my accounts, from years ago, and my balance swells by £2000, as a working man i refuse to call it crap, in fact it's my money being returned to me.

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Re: PPI

Post by FactualFrank » Fri Oct 18, 2019 12:58 pm

blackburnturfite wrote:When i am advised by family to try claiming off both my accounts, from years ago, and my balance swells by £2000, as a working man i refuse to call it crap, in fact it's my money being returned to me.
It's more about the annoying adverts, especially when somebody can do it themselves and be paid a lot more if it comes through.

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Re: PPI

Post by Herts Clarets » Fri Oct 18, 2019 1:05 pm

FactualFrank wrote:It's more about the annoying adverts, especially when somebody can do it themselves and be paid a lot more if it comes through.
Claims companies take 30% of the payout (25% plus VAT) for doing what you could have done yourself. I provided minimal details, it is down to the lender to access your account history and check. I know I had PPI on the credit card but cancelled it many years ago. I apparently paid nearly £800 for the policy over its time, their calculations gave me compensation for mis-selling of over £2k.

Blackrod
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Re: PPI

Post by Blackrod » Fri Oct 18, 2019 1:06 pm

Personally hate this claim culture and the firms that operate in this market. I had a non fault accident a while ago and the companies keep ringing me. I refuse to claim for something that isn’t just.
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Re: PPI

Post by Jimmymaccer » Fri Oct 18, 2019 1:23 pm

Let’s be fair, claims companies aren’t doing it for the good of society.....

Just like lawyers don’t defend people to ensure everyone has a fair trial......

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Re: PPI

Post by kaptin1 » Fri Oct 18, 2019 1:33 pm

Paulclaret wrote:You're not getting compensation, you're getting a refund of your premiums, which were allegedly miss sold, plus interest. The majority of PPI sales were, of course, not miss sold, but it doesn't stop claims from those claiming it was!
And the 8% cumulative interest rate applied is ridiculously punitive when compared to actual interest rates over the period

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Re: PPI

Post by houseboy » Fri Oct 18, 2019 1:45 pm

PPI and accident claims companies are annoying and I dislike the claims culture immensely but with PPI it is simply getting money back that was taken off you wrongly and that is no bad thing. PPI has got a bad name because of the endless phone calls from companies who needn't exist because they are not needed for the claim anyway. There is nothing wrong with getting back what was always yours in the first place.

Accident claims are a different animal altogether, with companies phoning hopefully about 'that non-fault accident you had 3 years ago'. Most 'accidents' are simply that but these companies always want to apply 'blame' to someone for it. If you trip over a flagstone then learn to watch where you are walking, don't sue the council. Most accidents have an element of 'it's your own fault' anyway. The no win no fee operators should be stopped and if you want to make a claim then run the risk of losing money if you fail. That would stop most of it. The problem is so bad now councils are doing away with playgrounds for fear some chav will sue them because their little darling has grazed a knee. It's no surprise that the ads for most of these companies are on during the day when most 'claimants' are at home drinking whatever gets them through their day.

In defence of the people who actually call you about these things have a bit of patience, they almost all hate the job but at least they are out there working and not slobbing at home on the social.
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TVC15
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Re: PPI

Post by TVC15 » Fri Oct 18, 2019 1:48 pm

kaptin1 wrote:And the 8% cumulative interest rate applied is ridiculously punitive when compared to actual interest rates over the period
It’s isn’t as this is money that is owed by Banks to customers.
If this was money owed by customers to the Banks do you think the rate would be less than 8% for an unsecured loan ?
The 8% is actually a pretty standard rate used in these kind of compensation arrangements. It’s what the ombudsman has used for many years when upholding financial complaints.

The worst thing about PPI has been of course the unsolicited calls we have all had for many years and the lack of any regulation over all these ambulance chasers. The reason that these parasites exist is because the burden of proof is on the Banks to prove that anybody taking PPI needed this....that was impossible as nobody recorded any information even if they did actually request it and need PPI - and of course many people genuinely did not know they were getting it as it was hidden in the loan repayments.
This has not just cost the Banks a fortune in payouts - it’s cost even more in operational costs. All of them have had teams of hundreds / thousands of staff doing the PPI investigation and refunds. It’s cost the banks many billions and they deserved it.
Remember Banks were making more money from selling PPI than they were in loan and credit card interest - which is particularly mind boggling when you know how much they make in interest.

Flying Without Ings
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Re: PPI

Post by Flying Without Ings » Fri Oct 18, 2019 1:48 pm

Blackrod wrote:Personally hate this claim culture and the firms that operate in this market. I had a non fault accident a while ago and the companies keep ringing me. I refuse to claim for something that isn’t just.
I suspect you wouldn't be saying the same if you was involved in a serious accident that left you with a broken leg (or worse) and being unable to work for a long period of time. Some people need to claim partly to recover their loss of earnings if their main source of income suddenly stops through something that wasn't their fault.
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Burnley1989
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Re: PPI

Post by Burnley1989 » Fri Oct 18, 2019 1:54 pm

Blackrod wrote:Personally hate this claim culture and the firms that operate in this market. I had a non fault accident a while ago and the companies keep ringing me. I refuse to claim for something that isn’t just.
Same, I had someone crash into the back of me and it did hurt my neck for a few weeks, all my mates were telling me I'd get a few grand compensation for a claim but I just couldn't do it, to me it was an accident and these things happen. I'm absolutely fine now
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Burnley1989
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Re: PPI

Post by Burnley1989 » Fri Oct 18, 2019 1:56 pm

Flying Without Ings wrote:I suspect you wouldn't be saying the same if you was involved in a serious accident that left you with a broken leg (or worse) and being unable to work for a long period of time. Some people need to claim partly to recover their loss of earnings if their main source of income suddenly stops through something that wasn't their fault.
If I needed compensating for loss of earnings that's different but its the trying it on that annoys me. I've seen peoples face light up when they've had a bump because they know they will get compo for whiplash, even though they're fine. In the next breath they will complain about car insurance costs

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Re: PPI

Post by Paulclaret » Fri Oct 18, 2019 2:04 pm

TVC15 wrote: - and of course many people genuinely did not know they were getting it as it was hidden in the loan repayments.
I understand that a number of sellers did not explain it properly and that is what has caused the problem, but to claim it was 'hidden in the loan repayments' is absolute nonsense. Every loan and mortgage agreement clearly stated the premium and interest payable on PPI payments, and any PPI payable on Credit Cards was clearly shown on the card statements. The fact is that people can't be bothered to read their paperwork!

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Re: PPI

Post by Flying Without Ings » Fri Oct 18, 2019 2:04 pm

Burnley1989 wrote:If I needed compensating for loss of earnings that's different but its the trying it on that annoys me. I've seen peoples face light up when they've had a bump because they know they will get compo for whiplash, even though they're fine. In the next breath they will complain about car insurance costs
I agree this and cold calling companies certainly gave claiming a bad name, especially a few years back. It's my understanding that the Courts and Insurers have really clamped down on fraudsters over the years so they are a lot more few and far between. It's simply not worth the risk to them anymore.

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Re: PPI

Post by Caballo » Fri Oct 18, 2019 2:16 pm

FactualFrank wrote:It's more about the annoying adverts, especially when somebody can do it themselves and be paid a lot more if it comes through.
It's more about dishonesty for me, the dishonesty of the banks at the time was appalling, but somehow the dishonesty of a significant number of claimants is something to be celebrated. Weird!

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Re: PPI

Post by kaptin1 » Fri Oct 18, 2019 2:34 pm

TVC15 wrote:It’s isn’t as this is money that is owed by Banks to customers.
If this was money owed by customers to the Banks do you think the rate would be less than 8% for an unsecured loan ?
The 8% is actually a pretty standard rate used in these kind of compensation arrangements. It’s what the ombudsman has used for many years when upholding financial complaints.

The worst thing about PPI has been of course the unsolicited calls we have all had for many years and the lack of any regulation over all these ambulance chasers. The reason that these parasites exist is because the burden of proof is on the Banks to prove that anybody taking PPI needed this....that was impossible as nobody recorded any information even if they did actually request it and need PPI - and of course many people genuinely did not know they were getting it as it was hidden in the loan repayments.
This has not just cost the Banks a fortune in payouts - it’s cost even more in operational costs. All of them have had teams of hundreds / thousands of staff doing the PPI investigation and refunds. It’s cost the banks many billions and they deserved it.
Remember Banks were making more money from selling PPI than they were in loan and credit card interest - which is particularly mind boggling when you know how much they make in interest.
Most banks can borrow unsecured at a much lower rate than 8% because lending to a bank is (typically) much less risky than lending to an individual. The fact that it is a standard rate used by the ombudsman doesn't make it right and I would argue in the current low interest rate environment it needs to be reviewed. If it is set so high as to be a deterrent to misselling then that is a different argument.

I agree re the claims companies though and the additional costs they have created through frivolous claims and information requests.

The banks were effectively using PPI to cross subsidise cheap loans that were charging interest that was lower than it should have been based on the riskiness of the loan. That was a mistake by the banks, but was nevertheless a benefit to the borrower, albeit the aggregate cost of interest + PPI was probably still too high.

So far banks have provided more than £50bn for PPI, which is a staggering sum of money.

Banks behaved terribly in (mis)selling these products, but I would argue that the punishment has still significantly outweighed the crime.
Last edited by kaptin1 on Fri Oct 18, 2019 2:37 pm, edited 1 time in total.

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Re: PPI

Post by thatdberight » Fri Oct 18, 2019 2:35 pm

Caballo wrote:It's more about dishonesty for me, the dishonesty of the banks at the time was appalling, but somehow the dishonesty of a significant number of claimants is something to be celebrated. Weird!
The dishonesty of the banks was staggering. There are plenty of people who don't even realise they had PPI because it was hidden. Of course lying to get compensation is wrong but I've put in a claim against every bank I've ever had just in case because I always refused it. If I had it anywhere, it was missold.

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Re: PPI

Post by houseboy » Fri Oct 18, 2019 3:02 pm

TVC15 wrote:It’s isn’t as this is money that is owed by Banks to customers.
If this was money owed by customers to the Banks do you think the rate would be less than 8% for an unsecured loan ?
The 8% is actually a pretty standard rate used in these kind of compensation arrangements. It’s what the ombudsman has used for many years when upholding financial complaints.

The worst thing about PPI has been of course the unsolicited calls we have all had for many years and the lack of any regulation over all these ambulance chasers. The reason that these parasites exist is because the burden of proof is on the Banks to prove that anybody taking PPI needed this....that was impossible as nobody recorded any information even if they did actually request it and need PPI - and of course many people genuinely did not know they were getting it as it was hidden in the loan repayments.
This has not just cost the Banks a fortune in payouts - it’s cost even more in operational costs. All of them have had teams of hundreds / thousands of staff doing the PPI investigation and refunds. It’s cost the banks many billions and they deserved it.
Remember Banks were making more money from selling PPI than they were in loan and credit card interest - which is particularly mind boggling when you know how much they make in interest.
Agree with most of this bud but as I said in another post these 'parasites' have had a good effect because as much as we hate them (and I do) they have kept 10s of thousands of people in work who might otherwise be on the social. Also I can say with 100% certainty that most of them hate doing it.
In fact the last time I checked there were more than 6k call centres in the UK alone and around 4% of the working population work in them. Imagine what that would do to the unemployment figures (and economy) if they were closed down because people don't like 'those damn cold callers'.

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Re: PPI

Post by TVC15 » Fri Oct 18, 2019 3:19 pm

Paulclaret wrote:I understand that a number of sellers did not explain it properly and that is what has caused the problem, but to claim it was 'hidden in the loan repayments' is absolute nonsense. Every loan and mortgage agreement clearly stated the premium and interest payable on PPI payments, and any PPI payable on Credit Cards was clearly shown on the card statements. The fact is that people can't be bothered to read their paperwork!
I know for a fact that one major bank at least included the PPI payment in with the loan repayment - it’s not a claim. It’s a fact - I worked there for 30 years.
Nothing about reading paperwork - even where it was shown separately. It’s the mis-selling of the product to people who did not need it. Plus it was proven that the banks firstly did not issue the correct paperwork and secondly many of them did not implement the correct systems in calculating the costs.

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Re: PPI

Post by TVC15 » Fri Oct 18, 2019 3:22 pm

houseboy wrote:Agree with most of this bud but as I said in another post these 'parasites' have had a good effect because as much as we hate them (and I do) they have kept 10s of thousands of people in work who might otherwise be on the social. Also I can say with 100% certainty that most of them hate doing it.
In fact the last time I checked there were more than 6k call centres in the UK alone and around 4% of the working population work in them. Imagine what that would do to the unemployment figures (and economy) if they were closed down because people don't like 'those damn cold callers'.
Yep get you - but it’s minimum wage and not great working conditions. My real complaint is that it took a lot of money from what the customer was owed but I also get a lot of people would not have been paid out / bothered claiming without them.
The people who ring you about whether you have had an accident - or tell you that you have - are worse.

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Re: PPI

Post by Paulclaret » Fri Oct 18, 2019 3:28 pm

TVC15 wrote:I know for a fact that one major bank at least included the PPI payment in with the loan repayment - it’s not a claim. It’s a fact - I worked there for 30 years.
Nothing about reading paperwork - even where it was shown separately. It’s the mis-selling of the product to people who did not need it. Plus it was proven that the banks firstly did not issue the correct paperwork and secondly many of them did not implement the correct systems in calculating the costs.
I also worked at a major Bank for over 30 years and I have NEVER seen a loan agreement from any other high street Bank which didn't show PPI as a separate payment. As I said, I agree that sellers were pressurised into selling it and therefore many were sold wrongly, however, the fact remains that people didn't read their agreements and many who have claimed it back were fully aware of what they signed up to.

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Re: PPI

Post by houseboy » Fri Oct 18, 2019 3:35 pm

TVC15 wrote:Yep get you - but it’s minimum wage and not great working conditions. My real complaint is that it took a lot of money from what the customer was owed but I also get a lot of people would not have been paid out / bothered claiming without them.
The people who ring you about whether you have had an accident - or tell you that you have - are worse.
The accident people are the worst for sure but again they employ a lot of people. Also I have worked in sales in various ways (mainly publishing) for over 30 years and I can say that many if not most of the people who work in these centres are on decent money. Some, but certainly not all, are on the basic wage but the commission structures are such that a lot can be earned if you are any good at it. The job is boring as sh!t mate but don't feel sorry for them financially, I've known kids in their late teens and early 20's earning in excess of 30k a year (but it is very hard work and exceedingly stressful). I have interviewed and worked with very many people who have done this job and it has lead them onto better and more respectable sales careers because it is a very tough learning curve.

Incidentally even though I have worked in sales for all this time I actually hate sales people - especially pushy ones who start using 'sales tacitcs' that I can see coming a hundred miles off. :lol: :lol: :lol:

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Re: PPI

Post by TVC15 » Fri Oct 18, 2019 3:39 pm

Paulclaret wrote:I also worked at a major Bank for over 30 years and I have NEVER seen a loan agreement from any other high street Bank which didn't show PPI as a separate payment. As I said, I agree that sellers were pressurised into selling it and therefore many were sold wrongly, however, the fact remains that people didn't read their agreements and many who have claimed it back were fully aware of what they signed up to.
Good for you - I think what you are saying is that your bank didn’t....which I believe you. Whereas I know the bank I worked at definitely did. You can’t speak on behalf of the other banks - and neither can I.

To say that many people knew what they were signing up to is a bit ridiculous tbh. There was a point in time when for a few years the only product a branch was targeted with “selling” was PPI. The staff were telling customers that they would only get the loan if they took PPI - and if you read the regulators reports on this that was commonplace at all banks. The commission they earned from each policy was massive.
The whole thing was a massive money making exercise - the banks got greedy because they saw soaring profits with virtually no cost - it was all on the bottom line. They got found out and got what they deserved.
How anyone can defend the banks is beyond me.

And did they learn their lesson - did they f-uck ? They got greedy all over again with sub prime lending and derivatives...

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Re: PPI

Post by houseboy » Fri Oct 18, 2019 3:46 pm

Paulclaret wrote:I also worked at a major Bank for over 30 years and I have NEVER seen a loan agreement from any other high street Bank which didn't show PPI as a separate payment. As I said, I agree that sellers were pressurised into selling it and therefore many were sold wrongly, however, the fact remains that people didn't read their agreements and many who have claimed it back were fully aware of what they signed up to.
I've had PPI checks as part of an agreement I was signing even though I knew I hadn't paid any. It was part of my agreement. I told them I hadn't had PPI but they went ahead and checked anyway. Nothing came up because, as you say, nothing was mentioned and my repayments were interest plus balance only. There were no 'hidden' costs and I do think that people who have had it have either been ripped off knowingly or took no time to read any of the T&Cs. Having said all that I have no problem at all with banks having to pay out occasionally, they don't hesitate to claim what is theirs when it's the other way around. Ask anyone who has ever had a cheque bounce or a failed direct debit. Scandalous charges.

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Re: PPI

Post by TVC15 » Fri Oct 18, 2019 3:48 pm

kaptin1 wrote:Most banks can borrow unsecured at a much lower rate than 8% because lending to a bank is (typically) much less risky than lending to an individual. The fact that it is a standard rate used by the ombudsman doesn't make it right and I would argue in the current low interest rate environment it needs to be reviewed. If it is set so high as to be a deterrent to misselling then that is a different argument.

I agree re the claims companies though and the additional costs they have created through frivolous claims and information requests.

The banks were effectively using PPI to cross subsidise cheap loans that were charging interest that was lower than it should have been based on the riskiness of the loan. That was a mistake by the banks, but was nevertheless a benefit to the borrower, albeit the aggregate cost of interest + PPI was probably still too high.

So far banks have provided more than £50bn for PPI, which is a staggering sum of money.

Banks behaved terribly in (mis)selling these products, but I would argue that the punishment has still significantly outweighed the crime.
The funding rates banks can obtain is irrelevant. I am not sure why you would defend the banks over something like this.
8% per year on money that banks have illicitly gained out of their own customers seems pretty fair to me. If somebody stole that money from your bank account or from your purse then then they could get a jail sentence or lose their job, have a criminal record for the rest of the life. The regulator has adjudicated that banks “stole” that money from its customers. The reasons the directors and senior managers don’t get jail sentences are exactly the same reason only one person got jailed in the aftermath of the banking crashes in 2008.

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Re: PPI

Post by Stalbansclaret » Fri Oct 18, 2019 3:49 pm

Paulclaret wrote:I also worked at a major Bank for over 30 years and I have NEVER seen a loan agreement from any other high street Bank which didn't show PPI as a separate payment. As I said, I agree that sellers were pressurised into selling it and therefore many were sold wrongly, however, the fact remains that people didn't read their agreements and many who have claimed it back were fully aware of what they signed up to.
I'm another person who worked for a bank for 30+ years and in the branch network all through the PPI years and I too have never seen loan paperwork where the PPI premium was not separately shown. There was a heavy "sales culture" in the late '90s/early 2000s but gradually over this period, and subsequently, the compliance regulations around the selling of PPI tightened to make mis-selling less likely. This initially took the form of customers having to sign declarations confirming that the product had been fully explained to them by the advisor through to, by the time I left banking in 2014, a full-on suite of explanatory videos which the customer had to watch before a loan could be processed.
There was undoubtedly some pressure-selling of PPI, particularly in the early part of this period, but the amount refunded by banks to customers now must vastly, vastly exceed this. I've heard of cases where people have received refunds of PPI premiums when they have actually claimed on the policy and, many times, people who've received refunds simply because no paperwork can be found after so many years. The general feeling is that anyone who claims has a high chance of success.
I don't hold any torch for the banks...they can afford it...but I do hate the "compo culture" generally in that I believe that, unless suffering from learning disability, people have to take responsibility for their own actions unless they have been fraudulently misled which was certainly not generally the case with PPI.
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Re: PPI

Post by Joe14 » Fri Oct 18, 2019 5:11 pm

FactualFrank wrote:This PPI crap can't end soon enough.
So crap I got a £3000 refund :lol:

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Re: PPI

Post by Bosscat » Fri Oct 18, 2019 5:50 pm

Joe14 wrote:So crap I got a £3000 refund :lol:
Good for you Joe :D .... obviously you had a loan or Mortgage etc etc that meant you had paid a good percentage of that to the banks ...
I hope you claimed it back for yourself and not through one of the parasite companies charging upwards of 20 to 30% of your claim in fees, thereby reducing your claim from the £4000 pounds you were probably owed

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Re: PPI

Post by Croydon Claret » Fri Oct 18, 2019 6:24 pm

The amount of mis-selling seems to vary between banks.

I've worked for Lloyds for 30+ years and whilst the Lloyds brand was no angel in this matter the amount that has been paid out to Halifax or Bank of Scotland customers is astronomically disproportionate to the amount of customers they have.

There must have been some serious targets being laid down in the HBOS network in order to let things get this bad.

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Re: PPI

Post by tarkys_ears » Fri Oct 18, 2019 6:31 pm

£13k here.

Was sold a mortgage that couldn't be got "without it" (I think)

Had to go to the FCA or whomever it was but yeah... nice one.

Shame there was about 3 grand in tax due on the interest :(

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Re: PPI

Post by kaptin1 » Fri Oct 18, 2019 8:46 pm

TVC15 wrote:The funding rates banks can obtain is irrelevant. I am not sure why you would defend the banks over something like this.
8% per year on money that banks have illicitly gained out of their own customers seems pretty fair to me. If somebody stole that money from your bank account or from your purse then then they could get a jail sentence or lose their job, have a criminal record for the rest of the life. The regulator has adjudicated that banks “stole” that money from its customers. The reasons the directors and senior managers don’t get jail sentences are exactly the same reason only one person got jailed in the aftermath of the banking crashes in 2008.
The funding rate is completely relevant to your comment which made the comparison to lending. As I said in my previous comment, if the rate is there to reflect fair compensation for lost return on the premiums paid (ie. because the money could have been used/invested elsewhere) then it is way too high. If it is meant to be a penal deterrent then it is fine and one could argue not high enough. I’m not defending the banks at all for their behaviour, but the overall penalty they have paid far outweighs the crime. I don’t believe for one minute that all of the people who have been paid out didn’t know what they signed up to. For many, it was actually a good (if overpriced) product, providing protection in the event of lost income. But because the burden of proving the product was not missold lies with the banks and because their records are so poor (their fault) it is virtually impossible for them to prove it wasn’t the case. The claims management industry that has sprung up on the back of this has driven the cost of administration (including the thousands and thousands of frivolous claims) and redress out of all proportion. Banks should (rightly) have been punished, but this has just spiralled way out of control.

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Re: PPI

Post by TVC15 » Sat Oct 19, 2019 7:56 am

kaptin1 wrote:The funding rate is completely relevant to your comment which made the comparison to lending. As I said in my previous comment, if the rate is there to reflect fair compensation for lost return on the premiums paid (ie. because the money could have been used/invested elsewhere) then it is way too high. If it is meant to be a penal deterrent then it is fine and one could argue not high enough. I’m not defending the banks at all for their behaviour, but the overall penalty they have paid far outweighs the crime. I don’t believe for one minute that all of the people who have been paid out didn’t know what they signed up to. For many, it was actually a good (if overpriced) product, providing protection in the event of lost income. But because the burden of proving the product was not missold lies with the banks and because their records are so poor (their fault) it is virtually impossible for them to prove it wasn’t the case. The claims management industry that has sprung up on the back of this has driven the cost of administration (including the thousands and thousands of frivolous claims) and redress out of all proportion. Banks should (rightly) have been punished, but this has just spiralled way out of control.
The funding rate is irrelevant because clearly that is not what was used in coming up with the 8% or as you said yourself it would be a lot less.
I used it as a comparison simply to highlight the point that anybody wanting to borrow money from a bank would pay a lot more than 8% so how can it be deemed as unfair if a bank is told to pay that rate back for effectively wrongly depriving a customer of that money ?
The rate is a redress rate - just like when an ombudsman adjudicates on a case 8% is used to reflect that the customer was denied having this money and effectively the potential consequences from this.
It’s detailed on the ombudsman’s own site but here’s a couple of extracts :

“So in most cases, for most consumers, we think a rate of 8% simple interest is appropriate to reflect the cost of being deprived of money in the past. This also reflects the current statutory interest rate on judgment debts”

”When we uphold a complaint and decide
to make a money award, we assess the loss the particular consumer has made in as much detail as we can. For example, how much worse off are they for having had an unsuitable investment, than if they’d had one that wasn’t unsuitable ?”

And of course some of the people knew what they were signing up to - but that does not make it right if the product was deemed as over priced as it was. Plus as I said previously it was found that many banks were using this product as a risk management tool and insisting that customers had to take it or they would not be accepted for the loan.
The lending guidelines around affordability checking were also completely different back then too - many customers were given loans they could not afford and this was even more the case when the PPI premiums were added in. There was also a massive culture of proactively selling top up loans - ie contacting customers to ask if they wanted more money and offering them a new loan and new PPI.

You say that the punishment has been disproportionate.
Disproportionate to what ? Certainly not the profits banks were making during this time. Take a look at the increased profit numbers the big banks were posting during this period and in particular since then - how can the likes of HSBC and Barclays regularly post profits of £5bn and more ?

PPI is not the only area where the banks have been hit with massive redress. Look at how much they have had to pay back for non CCA compliance. They take risks / cut corners and pay the consequences - and they do that because they know that the revenue they generate will more than cover any future penalties.

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Re: PPI

Post by kaptin1 » Sat Oct 19, 2019 2:29 pm

TVC15 wrote:The funding rate is irrelevant because clearly that is not what was used in coming up with the 8% or as you said yourself it would be a lot less.
I used it as a comparison simply to highlight the point that anybody wanting to borrow money from a bank would pay a lot more than 8% so how can it be deemed as unfair if a bank is told to pay that rate back for effectively wrongly depriving a customer of that money ?
The rate is a redress rate - just like when an ombudsman adjudicates on a case 8% is used to reflect that the customer was denied having this money and effectively the potential consequences from this.
It’s detailed on the ombudsman’s own site but here’s a couple of extracts :

“So in most cases, for most consumers, we think a rate of 8% simple interest is appropriate to reflect the cost of being deprived of money in the past. This also reflects the current statutory interest rate on judgment debts”

”When we uphold a complaint and decide
to make a money award, we assess the loss the particular consumer has made in as much detail as we can. For example, how much worse off are they for having had an unsuitable investment, than if they’d had one that wasn’t unsuitable ?”

And of course some of the people knew what they were signing up to - but that does not make it right if the product was deemed as over priced as it was. Plus as I said previously it was found that many banks were using this product as a risk management tool and insisting that customers had to take it or they would not be accepted for the loan.
The lending guidelines around affordability checking were also completely different back then too - many customers were given loans they could not afford and this was even more the case when the PPI premiums were added in. There was also a massive culture of proactively selling top up loans - ie contacting customers to ask if they wanted more money and offering them a new loan and new PPI.

You say that the punishment has been disproportionate.
Disproportionate to what ? Certainly not the profits banks were making during this time. Take a look at the increased profit numbers the big banks were posting during this period and in particular since then - how can the likes of HSBC and Barclays regularly post profits of £5bn and more ?

PPI is not the only area where the banks have been hit with massive redress. Look at how much they have had to pay back for non CCA compliance. They take risks / cut corners and pay the consequences - and they do that because they know that the revenue they generate will more than cover any future penalties.
Mostly fair and good points and I wasn’t aware of the Ombudsman’s guidance so that has provided useful clarity.

I would note however that banks have generated poor levels of profitability relative to their capital employed ever since the financial crisis and continue to do so. This is a consequence of increased regulation requiring them to hold more capital to make them safer, continual restructuring and redress charges and because there are much tighter controls over the products they can sell and hence profit from. The fact that they make £bns of profit is a function of them also putting huge amounts of capital to work. The typical large UK bank struggles to make a double digit return on equity capital, this being the minimum hurdle rate which most shareholders demand. Banks need to make better returns so that they can grow their capital bases and so increase lending. Ultimately a healthy banking system should = a healthy economy. Banks do need to pay for past demeanours but allowing claims management companies to abuse the system and rip too much capital out of the system (because of the huge cost of processing frivolous claims) becomes a problem in itself and hence a drain on the banking system and economy.

Anyway, I’m not trying to fall out but just want to add to what is an already interesting debate.

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Re: PPI

Post by TVC15 » Sat Oct 19, 2019 2:48 pm

kaptin1 wrote:Mostly fair and good points and I wasn’t aware of the Ombudsman’s guidance so that has provided useful clarity.

I would note however that banks have generated poor levels of profitability relative to their capital employed ever since the financial crisis and continue to do so. This is a consequence of increased regulation requiring them to hold more capital to make them safer, continual restructuring and redress charges and because there are much tighter controls over the products they can sell and hence profit from. The fact that they make £bns of profit is a function of them also putting huge amounts of capital to work. The typical large UK bank struggles to make a double digit return on equity capital, this being the minimum hurdle rate which most shareholders demand. Banks need to make better returns so that they can grow their capital bases and so increase lending. Ultimately a healthy banking system should = a healthy economy. Banks do need to pay for past demeanours but allowing claims management companies to abuse the system and rip too much capital out of the system (because of the huge cost of processing frivolous claims) becomes a problem in itself and hence a drain on the banking system and economy.

Anyway, I’m not trying to fall out but just want to add to what is an already interesting debate.
Yep agree with most of that and the requirements around capital ratios in recent years are way over the top and have had an undoubted adverse impact on the economy in restricting the mortgage market in particular.
The history of the regulator is interesting - how they allowed what went on pre 2008 with 110% mortgages available and the emergence of the sub prime market where affordability was irrelevant was pretty disgraceful. So post 2008/9 they decide to go to the other extreme with the excessive capital requirements together with things like the Mortgage Market Review.

Specifically in relation to PPI I also agree that the emergence of the claim companies was not a good thing. It was a mistake from the regulator to allow this and when they saw the carnage and chaos it was creating they still could have done something about it but chose not to.

All that said I still think that Banks get away with a lot of things they shouldn’t do and the regulator and CMA has not gone anywhere near far enough in a number of areas. The positive thing is that the new Banks like Starling, Monzo, Metro, Tide and others have seen a gap in the market and taken advantage of this which is great for the new generation of online / mobile customers. The fact that these banks has no legacy systems or customers to concern themselves about was also a big help in developing the products and services they have.

Interesting times ahead - but still glad I’m out of it now !!

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Re: PPI

Post by kaptin1 » Sat Oct 19, 2019 5:57 pm

Metro Bank haven’t covered themselves in glory though. Grew far too fast and suffered from shocking governance and risk management controls. The fact that they were awarded the top prize in the RBS remedies package was an absolute joke. I’ve met Vernon Hill (and his dog) on a couple of occasions and found him to be an odious character. Good news is that he’s finally been booted out of the door!

I also think the other digital banks have grown rapidly on the back of offering incentives (such as no fees on payments abroad) which probably aren’t sustainable. They are winning huge numbers of customers but still losing money hand over fist. The challenge they have is monetising the customers without slipping into the same practices as the bigger banks. At the same time the bigger banks are investing heavily in tech and replicating a lot of what the start ups are doing. It feels a bit like history repeating itself with the likes of Smile, Egg and Intelligent Finance (albeit this was owned by Lloyds) trying to break the mould back in the late 1990’s / early 2000’s and ultimately failing. Maybe one of the new names will succeed this time, but I suspect that in ten years time it will still be the same banks we know now that dominate.

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Re: PPI

Post by TVC15 » Sat Oct 19, 2019 11:35 pm

kaptin1 wrote:Metro Bank haven’t covered themselves in glory though. Grew far too fast and suffered from shocking governance and risk management controls. The fact that they were awarded the top prize in the RBS remedies package was an absolute joke. I’ve met Vernon Hill (and his dog) on a couple of occasions and found him to be an odious character. Good news is that he’s finally been booted out of the door!

I also think the other digital banks have grown rapidly on the back of offering incentives (such as no fees on payments abroad) which probably aren’t sustainable. They are winning huge numbers of customers but still losing money hand over fist. The challenge they have is monetising the customers without slipping into the same practices as the bigger banks. At the same time the bigger banks are investing heavily in tech and replicating a lot of what the start ups are doing. It feels a bit like history repeating itself with the likes of Smile, Egg and Intelligent Finance (albeit this was owned by Lloyds) trying to break the mould back in the late 1990’s / early 2000’s and ultimately failing. Maybe one of the new names will succeed this time, but I suspect that in ten years time it will still be the same banks we know now that dominate.
Problem with Smile, Egg and IF is that they were all part of bigger banks with other legacy customers. I was heavily involved with Smile - it never made any money from day one to the day it was shut down as a brand / product.

The new banks are very different to those older brands - partly because their products and services are actually very good. I think they will make money in the future though I do think the market can only sustain a limited amount of banks.

Personally i think this change in customer behaviour and the new banks are here to stay and it’s this current round of fin tech development together with open banking which will revolutionise banking in the next few years.

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Re: PPI

Post by Blackrod » Sat Oct 19, 2019 11:47 pm

Flying Without Ings wrote:I suspect you wouldn't be saying the same if you was involved in a serious accident that left you with a broken leg (or worse) and being unable to work for a long period of time. Some people need to claim partly to recover their loss of earnings if their main source of income suddenly stops through something that wasn't their fault.
I have been involved in one which was life threatening. I’m not referring to that here so reread what I have stated.

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Re: PPI

Post by Flying Without Ings » Mon Oct 21, 2019 9:15 am

Blackrod wrote:I have been involved in one which was life threatening. I’m not referring to that here so reread what I have stated.
Why do I need to re-read what you have stated? You gave your opinion and I've given mine...

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