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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 3rd Dec 12, 2:45 PM
    • 2,324Posts
    • 971Thanks
    Former MSE Helen
    MSE News: New finance watchdog can ban dodgy products
    • #1
    • 3rd Dec 12, 2:45 PM
    MSE News: New finance watchdog can ban dodgy products 3rd Dec 12 at 2:45 PM
    "Plans are being set in motion to allow the Financial Conduct Authority to ban dodgy products before they are mis-sold...."

Page 1
    • InsideInsurance
    • By InsideInsurance 3rd Dec 12, 3:03 PM
    • 22,215 Posts
    • 11,383 Thanks
    InsideInsurance
    • #2
    • 3rd Dec 12, 3:03 PM
    • #2
    • 3rd Dec 12, 3:03 PM
    Usual red top reporting at MSE hu?

    Payment Protection Insurance in most cases was not an inherently flawed product but was terribly miss sold. In the case of PPI therefore it would not have been stopped before the miss selling happened because it was the miss selling that was the problem.
    • KTF
    • By KTF 3rd Dec 12, 4:12 PM
    • 4,727 Posts
    • 1,940 Thanks
    KTF
    • #3
    • 3rd Dec 12, 4:12 PM
    • #3
    • 3rd Dec 12, 4:12 PM
    What exactly is the definition of a 'dodgy product'?
    • foundationsmcr
    • By foundationsmcr 3rd Dec 12, 5:14 PM
    • 191 Posts
    • 749 Thanks
    foundationsmcr
    • #4
    • 3rd Dec 12, 5:14 PM
    • #4
    • 3rd Dec 12, 5:14 PM
    Usual red top reporting at MSE hu?

    Payment Protection Insurance in most cases was not an inherently flawed product but was terribly miss sold. In the case of PPI therefore it would not have been stopped before the miss selling happened because it was the miss selling that was the problem.
    Originally posted by InsideInsurance

    I was going to say the same. The problem is the system it was sold under and the incentives offered, not the product.

    Complete hot air from the FCA in this case. Bluster to gain credence in a body which has been found sadly lacking in terms of audit and compliance checks (FSA and FCA are one and the same imo).
    • Alpine Star
    • By Alpine Star 4th Dec 12, 5:08 AM
    • 1,259 Posts
    • 611 Thanks
    Alpine Star
    • #5
    • 4th Dec 12, 5:08 AM
    • #5
    • 4th Dec 12, 5:08 AM
    Usual red top reporting at MSE hu?

    Payment Protection Insurance in most cases was not an inherently flawed product but was terribly miss sold. In the case of PPI therefore it would not have been stopped before the miss selling happened because it was the miss selling that was the problem.
    Originally posted by InsideInsurance
    If banning a product (regardless of weather it was inherently flawed) is the only effective way to prevent massive consumer detriment then it is a power that is reasonable to exercise.

    Banks were incapable of marketing PPI without mis-selling it - a fact illustrated when they voluntarilly withdrew it from the market in the wake of the sales restrictions placed upon it by the Competition Commision.
  • pqrdef
    • #6
    • 4th Dec 12, 5:44 AM
    • #6
    • 4th Dec 12, 5:44 AM
    Payment Protection Insurance in most cases was not an inherently flawed product
    Originally posted by InsideInsurance
    It was loaded with ludicrously high commission. Customers weren't just buying insurance, they were paying the banks a fortune for (mis-) selling it to them.

    This is endemic in insurance. It's horribly difficult to sell, but the market is oversupplied. Unfortunately the oversupply doesn't create a buyer's market. To get more customers, instead of cutting prices, the sellers just spend more and more on marketing channels and pass the cost on to the customer.

    This has corrupted the whole of retail banking, to the point where the banks are now just insurance-peddlers who do banking as a come-on.
  • opinions4u
    • #7
    • 4th Dec 12, 6:24 AM
    • #7
    • 4th Dec 12, 6:24 AM
    When I first sold PPI it was a monthly premium where the lender got a 12% commission.

    When it became a lump sum policy accruing huge chunks of interest and had bag loads of commission and reinsurance behind the scenes it became an unreasonably priced cart of dung.

    Nothing wrong with the basics of the cover though.
    • wantanswers
    • By wantanswers 4th Dec 12, 8:10 AM
    • 3,220 Posts
    • 857 Thanks
    wantanswers
    • #8
    • 4th Dec 12, 8:10 AM
    • #8
    • 4th Dec 12, 8:10 AM
    What exactly is the definition of a 'dodgy product'?
    Originally posted by KTF

    Good Question!
    • InsideInsurance
    • By InsideInsurance 4th Dec 12, 9:18 AM
    • 22,215 Posts
    • 11,383 Thanks
    InsideInsurance
    • #9
    • 4th Dec 12, 9:18 AM
    • #9
    • 4th Dec 12, 9:18 AM
    If banning a product (regardless of weather it was inherently flawed) is the only effective way to prevent massive consumer detriment then it is a power that is reasonable to exercise.
    Originally posted by Alpine Star
    I have no issues with the concept that a regulator can ban a product, I had issues with the article by MSE which said it would mean "dodgy products" could be stopped before miss selling happens and then goes on to talk about PPI which isnt a dodgy product but a miss sold product.

    As to people talking about the amount of profit the retailer makes from the sale.... not sure how that a product dodgy or not? There are many products with much bigger margins than PPI out there!
    • oldagetraveller
    • By oldagetraveller 4th Dec 12, 10:28 AM
    • 3,299 Posts
    • 1,796 Thanks
    oldagetraveller
    I'm always at a loss to understand why just about everything is mis-sold. Doesn't anyone mis-buy anything nowadays?
    It would be a refreshing change for someone to post "I've been rather lax, not read my application properly and mis-bought (fill in the blank space)".
    Is it now impossible for anyone to take responsibility for their own actions these days and blame their dog/cat/budgie/the weather etc. or just about anyone else for their errors?
    More MSE dross! When are the supermarkets (not) going to reduce their fuel prices again? We must be well overdue another article on that no news too.
    Last edited by oldagetraveller; 04-12-2012 at 10:34 AM.
    R.I.P. U.K. Democracy.
    • InsideInsurance
    • By InsideInsurance 4th Dec 12, 10:36 AM
    • 22,215 Posts
    • 11,383 Thanks
    InsideInsurance
    Is it now impossible for anyone to take responsibility for their own actions these days and blame their dog/cat/budgie/the weather etc. or just about anyone else for their errors?
    Originally posted by oldagetraveller
    Did once have a customer that said we had to speak to his budgie about a car accident before "putting him on"..... given I cant speak budgie I was never sure if the policyholder was blaming the budgie for the accident or just thought he'd talk more sense
    • Rafter
    • By Rafter 4th Dec 12, 11:09 AM
    • 3,837 Posts
    • 1,366 Thanks
    Rafter
    If the FCA are really serious they should issue a 14 day notice to payday loan companies to justify their charges and business model, how the product meets the needs of customers, social benefits, how collections process is fair and whether or not the return from the loans appears excessive.

    As I don't think any of these tests are currently passed they should then outlaw payday loans for 12 months until a fair business model and charging cap can be agreed - or ban them for good!

    R.

    P.S. Along with any 'overdraft' or short term borrowing fee or interest structure where the customer can end up paying back more than twice the original amount borrowed when measured over a 12 month period.
    Smile , it makes people wonder what you have been up to.
    • Alpine Star
    • By Alpine Star 4th Dec 12, 5:13 PM
    • 1,259 Posts
    • 611 Thanks
    Alpine Star
    I have no issues with the concept that a regulator can ban a product, I had issues with the article by MSE which said it would mean "dodgy products" could be stopped before miss selling happens and then goes on to talk about PPI which isnt a dodgy product but a miss sold product.
    Originally posted by InsideInsurance
    In financial services the way in which a product is sold defines whether it is dodgy.
  • dalesrider
    I'm always at a loss to understand why just about everything is mis-sold. Doesn't anyone mis-buy anything nowadays?.
    Originally posted by oldagetraveller
    Wait for the next big one to hit the headlines......

    People are starting to complain about interest only mortgages...

    Like you borrow money to buy a house. Only pay the interest.... What kinda fool does not realise they still have the loan to pay.

    They are saying that they were never told WHAT they needed to have in place..

    Would really love to see the FSA (or whatever they will be called) tell these people, that they have no claim what so ever.
    • InsideInsurance
    • By InsideInsurance 5th Dec 12, 9:06 AM
    • 22,215 Posts
    • 11,383 Thanks
    InsideInsurance
    In financial services the way in which a product is sold defines whether it is dodgy.
    Originally posted by Alpine Star
    Technically no, sales techniques and products are two totally separate things.

    You can get products that are dodgy in their own right either because of the terms and conditions or due to the morality of the product - the classic example being the old drink driving insurance (pays you an agreed amount if you lose your driving license due to be caught drink driving).

    Whilst product may be/ should be banned because miss selling is so common place is another matter and doesnt mean the product itself is inherently dodgy. ASU & PPI both continue to be sold via 3rd party providers without issue, for example.

    People are starting to complain about interest only mortgages
    by dalesrider
    An associate does a lot of deal making, mainly for ancillary insurance products, and he was saying that a lot of the claims management companies he's talked to recently are looking at mortgage miss selling as the next cash cow
    Last edited by InsideInsurance; 05-12-2012 at 9:11 AM.
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