MSE News: PPI D-Day on Wednesday

This is the discussion thread for the following MSE News Story:

"A crucial ruling that could force banks to re-open thousands of claims for mis-sold payment PPI will be heard this week ..."
Read the full story:
PPI D-Day on Wednesday



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  • dunstonhdunstonh Forumite
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    Personally, I hope the banks win. Not because they didnt mis-sell as in many cases they did. However, the FSA being allowed to change rules years down the road and apply them retrospectively is just plain wrong. Complaints should be judged on the rules in place at the time of the sale.

    If retrospective regulation is allowed, then the cost of retail financial products and distribution will go up.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • If you are in the fortunate position of not having been mis-sold anything, not had unfair bank charges or mis-sold PPI or a mortgage or whatever, is it time to stay out of the market for financial products for a few years while all this mis-selling andwho pays for it works its way through the system? Is that the best way of avoiding paying for too good to be true products you avoided?
  • dunstonhdunstonh Forumite
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    If you are in the fortunate position of not having been mis-sold anything, not had unfair bank charges or mis-sold PPI or a mortgage or whatever, is it time to stay out of the market for financial products for a few years while all this mis-selling andwho pays for it works its way through the system?

    It should be noted that only a tiny minority of financial products are mis-sold. The banks are responsible for the majority. Bank charges were not deemed unfair. Mis-sold mortgages are a minority and most that were had the borrower as complicit. So, you are not seeing any major cost issues at distribution on mortgages.

    Unfortunately, the current levies system sees the good companies paying for the bad. So, the costs will be spread across areas that are not even touched by these issues. The costs will be spread for many years as well.
    Is that the best way of avoiding paying for too good to be true products you avoided?

    The best way is not to use banks and salesforces or mailshots for buying financial products. You are going to be sold to if you use a sales distribution. Either use an IFA or do your own research.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • edited 18 April 2011 at 1:22PM
    marshallkamarshallka Forumite
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    edited 18 April 2011 at 1:22PM
    dunstonh wrote: »
    Personally, I hope the banks win. Not because they didnt mis-sell as in many cases they did. However, the FSA being allowed to change rules years down the road and apply them retrospectively is just plain wrong. Complaints should be judged on the rules in place at the time of the sale.

    Personally I hope that justice prevails.

    How can you say that if a firm missold they should be allowed to get away with it because the FSA rule did not apply at the time. I agree that they should not be allowed to change the rules BUT there should be "other" rules that should protect consumers from being ripped off if they have been missold no matter how far back it was. Debt has a problem of spiralling and being missold insurance certainly does not help.

    Not everyone likes the idea of fighting a bank/firm themselves in courts or having to pay a rip off claims management company. I wish that they if a firm missold insurance and the FSA rules do not apply to them then the actual insurer should be made jointly responsible for the actual sale (which would mean FOS jurisdiction) and then its up to the insurer to fight the firm selling the insurance and not the consumer.
  • edited 18 April 2011 at 1:14PM
    oakhouse13oakhouse13 Forumite
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    edited 18 April 2011 at 1:14PM
    dunstonh, thanks I read this

    http://www.guardian.co.uk/money/2011/mar/27/no-win-no-fee-mortgage

    There does not seem a way for consumers who buy the right products to ring fence themselves - selfish I know but claims seems to be a huge industry that I do not want to pay for as I do not use it.

    Thanks for the correction on bank charges.
  • Alpine_StarAlpine_Star Forumite
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    dunstonh wrote: »
    However, the FSA being allowed to change rules years down the road and apply them retrospectively is just plain wrong.

    The FSA are not applying any rules retrospectively. But ironcally the BBA are applying there own rules prospectively.
  • dunstonhdunstonh Forumite
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    How can you say that if a firm missold they should be allowed to get away with it because the FSA rule did not apply at the time.

    That's the point though. It was only mis-sold if the rules in place at the time of the sale were broken. If no rules were broken then it was not mis-sold.

    Do we go and prosecute smokers who used to smoke in pubs and restaurants because it was allowed in the past but not now? Do, we issue speeding tickets to those that drove down a road at 40mph before a speed limit came in to reduce that?

    I know my view is at odds with the theme of the forum. I think where there have been mis-sales then the consumer is right to complain and expect redress where applicable. However, where no rule was broken then they should not use some retrospective ruling to make it a mis-sale. Where does that lead to once you open that door?

    Look at an example like this. An investment bond is used because it avoids capital gains tax at 38% and only pays 20% within the fund. It is therefore tax efficient. Then the Govt changes the CGT rate to 18%. Now the investment bond paying 20% is no longer suitable because of a later tax change.

    Should that person be able to get a successful complaint because of that unforeseen change?
    dunstonh, thanks I read this

    http://www.guardian.co.uk/money/2011...o-fee-mortgage

    There does not seem a way for consumers who buy the right products to ring fence themselves - selfish I know but claims seems to be a huge industry that I do not want to pay for as I do not use it.

    There is a big concern that these claims companies are putting in false claims and generating complaints that purely benefit themselves with up front fees. My own compliance company that handles complaints for many thousands of IFAs has said that around 1/3rd of the complaints they currently receive are about products that were not even taken out. Yet the complaint letter is nearly always template and in most cases via a claims company and states perfect recollection of what happened. How is that possible when the product was never bought?

    PPI is a mess. I don't think it was mis-sold as much as made out. However, it lacked an audit trail in many cases and that lack of audit trail now helps consumers as they can say all sorts of things were said or done and the companies have little way to prove otherwise and are having to pay out. It is noticeable that the one form of PPI that was sold under advice has a much much lower level of complaint/success rate. That is because advice cases keep the docs and give an audit trail. A lesson learnt from the endowment days where it was estimated that out of a typical 1000 complaints, 220 would result in redress but only 20 of those were actual mis-sales. The other 200 had to be paid out because the documentation was missing or inadequate. So, you had a not guilty but not proven either that resulted in redress.

    I recently had a pay an additional levy to the FSCS, as did all IFAs. It was to cover the keydata failure and mis-sales that occurred. Yet I have never recommended one of their products. Some firms were reporting levies in the millions of pounds range despite never having anything to do with them. The situation currently is that the good firms pay for the bad.

    I operate on a low cost model and absorbed that particular levy. (although my charges do take into account the levies in general) However, if my PI liability insurance goes up 4x in cost because the insurer has to consider retrospective legislation, then my fees will have to go up. That will be mirrored across all firms as well all have to have liability insurance and hold sufficient money in reserve.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • oakhouse13oakhouse13 Forumite
    767 Posts
    What is the evidence like from both sides before the courts?

    The FOS was shambolic giving evidence to the Treasury Select Committee on financial regulation.
  • dunstonh wrote: »
    Personally, I hope the banks win. Not because they didnt mis-sell as in many cases they did. However, the FSA being allowed to change rules years down the road and apply them retrospectively is just plain wrong. Complaints should be judged on the rules in place at the time of the sale.

    In other words, a lot of the complaints should be upheld under the rules as they stood at the time anyway.

    dunstonh wrote: »
    If retrospective regulation is allowed, then the cost of retail financial products and distribution will go up.

    In other words, as I have said elsewhere, the "protection" is not free. Consumers still lose out, just in a different way.

    Mind you, retrospective legislation would resolve the deficit at a stroke. All we have to do is decide that Income Tax must be charged at 50% for everybody for the last five years and send a bill to everybody, payable by the end of May.


    Of course it wouldn't work because everybody would complain it was unjust to change how the rules worked in the past. But a retrospective change is no less unjust because it is imposed on the few rather than the many.
  • dunstonhdunstonh Forumite
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    In other words, a lot of the complaints should be upheld under the rules as they stood at the time anyway.

    Yes. I think that a lot of the complaints would still result in upheld decisions under existing rules. Its really only the opportunistic ones that would benefit from retrospective legislation.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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