'"Wish I'd been stupid enough to get PPI in the first place"' blog discussion

MSE_Martin wrote: »

No at the time I said "it wasn't compulsory" as it wasnt and not to go for it - as you could get far cheaper standalone policies if it was neeeded (its even if my first book I think). And that's the point. This was a lie - to be compulsory the PPI had to be within the APR. So if they said it was, or even worse, it actually was then the whole thing is a scam - which takes us back to the blog.

Fair point Martin. It was a lie and a scam, all to enable the banks to effectively charge more than the APRs they quoted.

This misrepresentation was illegal. When it was happening I knew it was wrong, you clearly knew it, and the banks must surely have known it to come up with such schemes. It's hard to think that the regulator didn't know it but chose not to do anything about it. Above all some borrowers (maybe a minority) knew it too - some may even have read your advice - but they chose to be complicit with the lie through fear that their loan application would otherwise be rejected. Let's assume that fear was genuine, and the banks did all they could to instill such fear, but could not of course go so far as to widely confirm that PPI was compulsory - because they knew that to say so meant it would need to be in the APR.

This sharp practice could have been nipped in the bud, by the regulator. Banking licences could have been threatened, or even actually revoked. Bank directors could have been guillotined (sorry, censured or even disqualified). There could have been public campaigns demanding that the banks operated properly within the law.

The question is whether the mass compensation of PPI victims is now an appropriate or even adequate response. I like Percy's views, and I believe that some (most) are being financially over-compensated. Others it seems were left desperately uninsured and giving back the premiums (plus a bit) is hardly the point. It is easier, it seems to me, to let the broad munificence of the compo brush the possible criminality of the original actions and failings of the regulator under the carpet. It does little to restore decency and honesty to banking. It almost risks encouraging future misbehaviour as a calculated financial risk.