MSE News: banks fail to hit PPI complaints deadline

Alpine_Star

magpiecottage wrote: »

Sorry AlpineStar but I think your expectation is unrealistic.

The fact is that everybody accepting an offer along these lines knows they will receive fair redress without further argument as soon as they can (and it is in the banks' interest to do so because they do not want to pay interest at 8%).

And I still cannot see any alternative solution to the fact that it was not possible to get enough people to do the calculations within the timescale.

There are also threads on this board that show even when the figures are given consumers do not understand them anyway.

All banks agreed to the to the requirements of the Policy Statement after deciding not to challenge the Judicial Review judgment. Some banks agreed an extended timescale with the FSA. How can an expectation that they should comply then be unrealistic?

And even HSBC - the worst offender - has admitted that a refund figure (and not just how the calculation of it) should have been included in offer letters by 31 August.

src007

Alpine_Star wrote: »

And even HSBC - the worst offender - has admitted that a refund figure (and not just how the calculation of it) should have been included in offer letters by 31 August.

This article suggests that the figures should have been included.

http://www.guardian.co.uk/business/2011/aug/30/hsbc-payment-protection-insurance

However, whilst this seems to be a small failure, I can't see how the consumer is really losing out if the offers are fair.

Blackhorse are the only ones still acting outrageously because they've gone back to making low, mis-leading offers without figures to trick the consumer into accepting less than a full refund (as well as completely rejecting clear mis-selling and not responding to SAR's breeching the data protection act).

Real loss to consumers is happening there!

tifosi

magpiecottage wrote: »

Sorry AlpineStar but I think your expectation is unrealistic.

The fact is that everybody accepting an offer along these lines knows they will receive fair redress without further argument as soon as they can (and it is in the banks' interest to do so because they do not want to pay interest at 8%).

And I still cannot see any alternative solution to the fact that it was not possible to get enough people to do the calculations within the timescale.

There are also threads on this board that show even when the figures are given consumers do not understand them anyway.

MC,

I'm sorry but the way you talk about it, you create a vision of people working with notepads, pencils and an abacus

The year is 2011

I have personally tested software systems WAY more complex than the type that would be required to make the calculations we are talking about here

Therefore, the timelines being quoted to calculate and pay redress are a nonsense and I have no doubt the banks are very much aware of this

I can appreciate that in a small number of cases manual interaction would be required, but in most cases this should be a case of input data from account X through algorithm which gives figure for settlement

Do banks carry out manual checks and balances on every transaction that takes place during a working week? - no, they use automated systems. just as they should be doing for all the PPI redress

If they do not have this system set up by now, some years after this fiasco first came to light then that is completely and utterly inexcusable

There are mutiple people on this forum and many others that have managed to come up with spreadsheets that can work out valid figures quickly and easily so if a bunch of "amateurs" can sort it, why cant the masters of finance as we know it?


As for the FSA/FOS etc, I believe they do deserve berating, because each time they step in on the side of the consumer it seems so badly planned and executed I despair

The timelines for the calculation and payment should have been defined to the nth degree, leaving absolutely NO room for the banks to manouvere - instead we have the initial 8/12/16 weeks but then a complete no mans land

I can give a clear example of how inept they are - when FOS got the RBS to settle my claim, they sent a letter on the Friday afternoon (PDF via email) following receipt of my signed acceptance stating they allowed the bank 4 weeks to pay out and to contact them if it was not received by then.

The following Wednesday then stated in email it was actually 8 weeks (this was in July)

It's a disgrace, and whilst not big on conspiracy, I cant help but feel the calculation and payment timeline was left without proper definition on purpose

The recent news item only reinforces this IMHO by their (FSA's) sheer audacity to puff up their chest and broadcast to the nation how wonderful they are and how many complaints have been settled

Sorry, but "Settled" is not "yes, we missold to you but you'll have to wait 28 working days to find out how much and receive it"


"Settled" in the England I live in means paid

Otherwise I could walk out of a restaurant leaving a note saying "I'll write to you in 28 working days with a cheque" and I will have "settled" the bill

Alpine_Star

tifosi wrote: »

MC,

I'm sorry but the way you talk about it, you create a vision of people working with notepads, pencils and an abacus

The year is 2011

I have personally tested software systems WAY more complex than the type that would be required to make the calculations we are talking about here

Therefore, the timelines being quoted to calculate and pay redress are a nonsense and I have no doubt the banks are very much aware of this

Indeed.

PPI remediation software is readily available.

http://www.charter-uk.com/financial-ppi-remediation.php

magpiecottage

tifosi wrote: »

The year is 2011

I have personally tested software systems WAY more complex than the type that would be required to make the calculations we are talking about here

There are two problems with your generalisation

The first is that the FSA requires firms to ensure that those doing the calculations are competent to do it. That means they need to be in a position to demonstrate that they are competent.

The second is that you need to ensure the calculation matches the actual cost to the borrower. With a fixed rate loan that is quite straightforward.

If the loan rate is variable it is more complex because the calculation will need to follow movements in the interest costs.

If it is for a credit card it is even worse because you also have to go through and follow the expenditure and repayment pattern of each individual cardholder.

As for the FSA/FOS etc, Ibelieve they do deserve berating, because each time they step in on the side of the consumer it seems so badly planned and executed I despair

Neither is supposed to be "on the side of the consumer" - they should be neutral.

I can give a clear example of how inept they are - when FOS got the RBS to settle my claim, they sent a letter on the Friday afternoon (PDF via email) following receipt of my signed acceptance stating they allowed the bank 4 weeks to pay out and to contact them if it was not received by then.

On what grounds did you complain?

It seems to me that somebody who indicates they are capable of carrying out these calculations would be the sort of person who would understand the costs and implications of purchasing PPI.

tifosi

Response in italics below

magpiecottage wrote: »

There are two problems with your generalisation

The first is that the FSA requires firms to ensure that those doing the calculations are competent to do it. That means they need to be in a position to demonstrate that they are competent.


The example I quote of my RBS casts doubt on this - the spreadsheet I was sent clearly shows that either the person attempting the calcs was either incompetent or RBS are deliberately trying it on

The second is that you need to ensure the calculation matches the actual cost to the borrower. With a fixed rate loan that is quite straightforward.

ok, so if the loans are straight forward why are they not being sent out quickly, well in advance of the cards? (they arent, it seems completely random how long any given loan/card takes)

If the loan rate is variable it is more complex because the calculation will need to follow movements in the interest costs.

again, with the resources available to the banks, I'm sure these "complex" calculations are mere childs play

If it is for a credit card it is even worse because you also have to go through and follow the expenditure and repayment pattern of each individual cardholder.

I dont see this at all, each given month you need to know
a)the remaining balance

b) the parts of the balance that relate to
i) purchases
ii) cash withdrawals
iii) balance transfers
The above would allow you to accurately calculate the interest brought to bear on the PPI portion of the balance


Neither is supposed to be "on the side of the consumer" - they should be neutral.

OK, if we accept that, how neutral is the approach to timelines over the last 10 months or so?

On what grounds did you complain?


It seems to me that somebody who indicates they are capable of carrying out these calculations would be the sort of person who would understand the costs and implications of purchasing PPI.

My grounds of complaint are irrelevant to this discussion, but I took the PPI around 1996 (personally cannot remember ticking the box!) but then cancelled it around 2003 when I became older and more savvy (though they tried their damn hardest to stop me cancelling it!)

It was only following CAG and the bank charges issue (right at the beginning of that) that I started taking an interest and applying my thoughts to such things

The spreadsheets that helped me get my head around it all, were the work of others, that I am eternally grateful to

magpiecottage

Having done pension review, mortgage endowment and PPI calculations, I would agree that PPI and endowment redress calculations are far less complex. However the example of RBS that you cite shows they can still be carried out incorrectly.

Furthermore, even if a spreadsheet or other software is used, unless the data is correctly loaded into it, you will still get the wrong answer. I have found errors FOS have made using bespoke software before now.

So I think it is far better to confirm to complainants that they will be redressed and take a little longer to get the right figure than, as has happened to you, offer the wrong figure now.

After all, the purpose is to put them back into the position they would have been in, so there will be further interest to cover this.

magpiecottage

I am going to make a point here about how these upholds are likely to work in practice.

There are really three options available to complainants.

The first is to complain to the FSA that the firm has not complied with the rules. However, the FSA is almost certainly aware of how they have done this. It could, if it wished, take enforcement action against them. It is unlikely to do this because that would simply divert the firm's resources from addressing the problem and make everything take even longer. It will NOT intervene in individual complaints because that is not its role.

The second is to accept - in which case the firm will calculate the redress in accordance with the FSA rules up to the date the cheque is sent to you or your account is credited and will, or at least should, provide you with details of how the calculation has been done.

The third is that you can complain to FOS. If you do that it will enter the queue at FOS. The firm will get on with settling those offers that are accepted and wait until FOS deals with your case. When FOS does get round to dealing with it, the firm is entitled to object, arguing that it has already made an offer to redress you in accordance with the FSA's criteria or it can withdraw the offer and fight the case based on specific evidence - which it may, or may not win. However, the best you can expect to get by this is what you have already been offered and you risk getting nothing at all.

A number of posters have said that you cannot make a decision without knowing how much you will receive. However, that is not true. Because an account of how the figure is arrived at should be provided you will be able to check it. If the calculation is correct you can let the matter rest. If you find they have paid too much you can, if you wish, offer to reimburse the overpayment (which I can really see happening!). If they pay too little, you can make a further complaint - and if necessary take that to FOS.

Paying too little is, realistically, very unlikely to happen in any individual case. There may be one or two mistakes but the banks know they are in the spotlight.

tifosi

MC,

Firstly - how does my example show RBS can calculate correctly? - I have had to write to them twice so far due to my offer being quite obviously wrong!

The offer is based on simple interest being added to the PPI premiums throughout the life of the card, when it should of course be compounded (in fact, even at simple the figures are too low!)

The problem is you seem to constantly quote what they "should" be doing

In practice their is very little evidence of people being sent the correct details to allow them to assess whether they are being offered correct redress

I have helped many friends and family in addition to my claim and in most cases the acceptrance letter is little more than "we have upheld your complaint and if you sign and return this acceptance form we mill make redress in line with FOS recommendations" (in a lot of cases, literally these words and no more)

For those people that either

a) dont spend their days buried in information regards PPI like many of us on here

b) have a friend that does

How is the above detail giving them a clear picture of what they can expect?

Even when I asked RBS for a full breakdown of how the redress they offered was calculated I was just sent a printout of the spreadsheet with the "PPI premium" , "Interest on premiums" and "8% compensation" columns showing the amounts - absolutely no detail whatsoever of how the actual calculations were made to arrive at the figures in the columns

The first letter merely stated "we have refunded £X amount and enclose a cheque"!


You also go on to refer to the signing prior to knowing the amounts issue and state that you can sign and then question if the figures are wrong when the redress is sent

I'd ask, why the hell should people have to go through this 2 tier approach? - the calculations should be available when they are being asked to sign - where else would you see such a ridiculous situation?

If the process was going to take 24 weeks, not 6, the banks and FSA/FOS should have been honest with the consumer in the first place, not put them through this charade of "16 weeks..........oh, and another 8 to actually tell you how much and pay it"

For me, the biggest evidence that banks are not applying appropriate resource to this is when we see the likes of Santander paying out claims within 1-2 weeks of receiving complaints

But then of course, unlike the rest, they didnt put claims on hold whilst they were involved with the JR

Also, the last post above seems to come across as you have no choice but to like it or lump it -

FSA wont get involved because it will cause further delays? - well, if the banks are quite clearly offeriing incorrect redress on a regular basis (despite having had in some cases 6 months or more to reach a correct offer) then they need to get involved irrespective of the impact

FOS - complaining to them puts you in the Q? - yes, but if the regulatory bodies were checking the banks working practices to the detail you claim they are, there would be no need for complaints regards the redress as the majority (allowing for a gfew glitches) would be right first time, whereas if we take MSE (and my personal experiences) as a straw poll, they get it wrong more often than not

The whole approach from FSA and FOS at the moment seems to be a firefighting excercise - they need to actually get into the banks with people of real world expertise and sort out the whole approach the banks are taking ("short term pain, long term gain..."), but of course this is something that should have been in place well over a year ago

I do not believe the banks are properly investigating each complaint (a fact supported by recent HFC letters stating "whilst we cannot comment on the particular issues of your complaint" - why not? you've taken (in the case of this complaint) 7 months to come to this decision so WHY can you not address the complaint properly and advise what areas you did and did not find relevant?

To me, the regulatory bodies are NOT regulating - the fines that have been handed out to some of these firms are not of sufficient gravity to make them sit up and take notice by investing enough fiscal and human resource to ensure this is sorted accurately and swiftly with the threat of even larger fines if they do not comply

The fines handed down appear large to the average consumer, but compared to the many £M's the banks will make from people that will not want to claim in the first place, or be put off by the first negative response they receive in response to a claim are a drop in the ocean

Witness Black Horse's approach this week - a CMC stating 100 letters came through in one days post with 92 rejections - could it be they were just trying to meet the 31st August deadline by "settling" the complaints andrejecting them without due consideration?

magpiecottage

tifosi wrote: »

how does my example show RBS can calculate correctly? - I have had to write to them twice so far due to my offer being quite obviously wrong!

You miss my point which is that it has clearly been rushed and done incorrectly.

The offer is based on simple interest being added to the PPI premiums throughout the life of the card, when it should of course be compounded (in fact, even at simple the figures are too low!)

That is incorrect. They have to reconstruct the entire lifecycle of the account and reverse interest charges that would have been avoided if the PPI premium had not been charged in order to put the complainant back into the position they would have been in. Only for those periods when this results in a credit balance does this result in 8% simple interest being credited.

That means the model you are thinking of is flawed and it therefore follows your argument, which relies on that model, is flawed too.

The problem is you seem to constantly quote what they "should" be doing

That is not a problem at all, it is merely a reflection of the fact that I cannot comment on individual cases because I have not seen the available evidence.

In practice their is very little evidence of people being sent the correct details to allow them to assess whether they are being offered correct redress

There is nothing to stop people asking for it.

I have helped many friends and family in addition to my claim and in most cases the acceptrance letter is little more than "we have upheld your complaint and if you sign and return this acceptance form we mill make redress in line with FOS recommendations"

Which is precisely what they are entitled to if the cover was missold.

For those people that either

a) dont spend their days buried in information regards PPI like many of us on here

b) have a friend that does

trHow is the above detail giving them a clear picture of what they can expect?

I am not actually sure that having the information is going to help.
If you do not understand then the calculation it will not help.

Even when I asked RBS for a full breakdown of how the redress they offered was calculated I was just sent a printout of the spreadsheet with the "PPI premium" , "Interest on premiums" and "8% compensation" columns showing the amounts - absolutely no detail whatsoever of how the actual calculations were made to arrive at the figures in the columns

I suspect they have not used a spreadsheet but a system by a company called Exasoft.

I have not used it myself but am familiar with the output. It does the calculations internally and does allow a certain amount of "deskilling". However, it also means there is no means of checking the individual calculations.

Worse, it is used by FOS - so even if you dispute it you are unlikely to get anywhere.

In the one case I disputed a FOS calculation, my own calculation was significantly different. Eventually I found a FOS employee had used the software incorrectly and produced the wrong answer (not suprisingly). By reproducing the error I got almost exactly the same answer but that did not make it right, only showed that I had apparently identified the problem.

The software does produce accurate results, as far as I can tell, but clearly with any form of automation rubbish in will lead to rubbish out.

The first letter merely stated "we have refunded £X amount and enclose a cheque"

That is clearly a breach of the rules and I would agree it is unsatisfactory.

Your argument that people are signing up something without knowing what it is does sound unreasonable but, actually, we do that in other aspects of life. If you sign up for a pension scheme you do not know what you are going to get back - because you cannot tell what the annual pension will eventually be or how long you will live. If you take your car for repair you do not know for certain what it will cost. By contrast, you do know how the firm is required to calculate the redress and, if you have or are willing to buy the expertise, you can verify that the figure is correct.

I do not propose to comment on the rest of your post because, for whatever reason, we are where we are.

However, I DO object to your (and others') use of the phrase "firefighting" as though the FSA is panicking. This is not, as you might suppose, because I think it is not but, rather, that firefighters do NOT normally panic but plan how to deal with the problem.

Sometimes that plan requires specific action to stop the fire and then the mess can be cleared up afterwards (the Fire of London was halted by actually destroying buildings in its path).

I think the banks are doing something similar. It is NOT idea but it is probably the best that can realistically be achieved and no amount of complaining will change that.

As far as Black Sheep is concerned, I am not sure it was ever part of the JR, even though its parent was, and unfortunately, FOS only has limited powers of intervention.