Lloyds acting unethically?

AshleyKF

I have received a letter from Lloyds refusing to uphold my complaint over mis-sold PPI.  

What is staggering about their decision is that they actually admit this: 'we did not inform you that we would receive a commission and a share of any related profits from the insurance company.'  However, due to the date I entered into a new mortgage contract (and signed up for PPI), the Financial Conduct Authority's rules on this matter 'do not apply.'  In other words, the bank is virtually admitting that when I was sold PPI, they kept me in the dark about commission fees paid to them by insurers BUT all this is irrelevant because the rules brought in by the FCA (which told the banks they were acting unfairly in not disclosing these fees) were applied after I signed.  

Lloyds then had the temerity to point out in their letter to me that prior to the FCA making the rules, the bank was a member of the General Insurance Standards Council (GISC) which - I quote - 'expected its members to act fairly and reasonably towards customers.'  I would have thought that hiding from me the commission fees they were keen to earn at my expense is hardly acting fairly and reasonably.  

In the light of the recent court cases where a judge upheld bank customers' complaints because the banks in question had taken huge commission fees (without disclosing this to their customers), have I got a good case for re-igniting my claim, even though Lloyds have told me my complaint is 'now closed'?  Or am I better off taking this to the Financial Ombudsman?

brettcta

They’ve acted perfectly fine, they’ve rejected your mis-sale complaint and they’ve also rejected your Plevin (commission) aspect as it’s not in the defined criteria for that. 

fortunately, the law and personal opinions are 2 very distinct things so your feelings on whether or not they have acted ethically (maybe)  are not cause for them to uphold your complaint so Unless you have a reason for appealing the mis-sale complaint, then there’s nothing to ‘reignite’ and the FOS will tell you they can’t help either. Time to move on with your life.

dunstonh

What is staggering about their decision is that they actually admit this: 'we did not inform you that we would receive a commission and a share of any related profits from the insurance company.'  

That is not staggering.   There was no regulatory requirement at the time of sale to make that disclosure.

However, due to the date I entered into a new mortgage contract (and signed up for PPI), the Financial Conduct Authority's rules on this matter 'do not apply.'  

That is also correct.  The commission disclosure rules apply to debts arranged under the consumer credit act amended 2006.   Mortgages never used to be under the consumer credit act.   The commission disclosure requirement was not a breach of FCAs rules.  It was a breach of the CCA.   So, as the mortgage as under the FCA rules, there was no breach.

In other words, the bank is virtually admitting that when I was sold PPI, they kept me in the dark about commission fees paid to them by insurers BUT all this is irrelevant because the rules brought in by the FCA (which told the banks they were acting unfairly in not disclosing these fees) were applied after I signed.  

As it did no wrong, there is nothing to admit.   The FCA required no commission disclosure.    The CCA requirements were a bit of luck as no-one knew about it until a judge ruled and it made it retrospective.

Lloyds then had the temerity to point out in their letter to me that prior to the FCA making the rules, the bank was a member of the General Insurance Standards Council (GISC) which - I quote - 'expected its members to act fairly and reasonably towards customers.'  I would have thought that hiding from me the commission fees they were keen to earn at my expense is hardly acting fairly and reasonably.  

And it did act fairly and reasonably.  It told you the premium.  you agreed to it.    Did you expect the bank to arrange it for free?

In the light of the recent court cases where a judge upheld bank customers' complaints because the banks in question had taken huge commission fees (without disclosing this to their customers), have I got a good case for re-igniting my claim, even though Lloyds have told me my complaint is 'now closed'?  Or am I better off taking this to the Financial Ombudsman?

You have no case whatsoever as 

a) the two recent court cases are being appealed. So, the final position is not known

b) your debt was not regulated under the CCA. So, it is impossible to be in breach of the CCA.

c) The non-disclosure of the commission was not a rule breach for debts not regulated under the CCA.

AshleyKF

Thanks for your expert advice.  You've saved me a lot of time and trouble pursuing this further.  It's frustrating, though, in the sense that two years after I signed for the PPI, I became self-employed - and that was one of the main reasons I got a payment of £10,000 in mis-sold PPI several years ago.  In one sense, I'm now glad to be shot of all the hassle caused by PPI.  Would it not have been better for the government to have ordered the banks to re-pay ALL PPI?  Or would that have been unfair on the banks?  

[Deleted User]

It would certainly have been unfair on those customers who either wanted it or went on to make claims under the policy.

brettcta

Deleted_User said:

It would certainly have been unfair on those customers who either wanted it or went on to make claims under the policy.

Not that this stopped a sizeable portion of them complaining anyway.

dunstonh

Would it not have been better for the government to have ordered the banks to re-pay ALL PPI?  

Not all PPI was missold.  Some distribution channels did heavily sell it incorrectly. Others have little or no complaints whatsoever.  So, it would be unfair on the good distribution channels.  Plus, a lot of people chose to buy PPI and it has benefitted a lot of people.     Some types of PPI are better than others.

repairmyphone

Thank you very much for sharing the information.