It beggars belief, but our big banks have been caught up in yet another financial scam. Thirteen banks and credit card companies have agreed to stump up £1.3bn towards compensation for several million people who were mis-sold credit card and identity theft protection. Card Protection Plan (CPP) Ltd, is a company offering insurance against loss of credit cards and identity theft. The Financial Conduct Authority fined CPP £10.5m in November 2012 because “Customers were given misleading and unclear information about the policies so that they bought cover that either was not needed, or to cover risks that had been greatly exaggerated.”
CPP not only sold directly to customers, but high street banks and credit card issuers also introduced millions of customers to CPP. When a customer obtained a new credit card, it came with a contact number which many thought had to be called before the card could be activated. Thinking they were speaking to their bank, they were in fact talking to a salesperson from CPP. You can guess the rest. Incredibly, some of the cards already contained safeguards against loss and ID theft. And cancelling some of these mis-sold products hasn’t proved easy either.
This latest financial scandal is further proof of the rampant incompetence and greed infecting our big banks. It makes you wonder what’s been going on in their boardrooms over the last decade. We’ve had the mortgage payment protection scam, the interest rate swap scam, and the scam where the big banks manipulated LIBOR (the rate at which they lend to each other). Oh, and before I forget, there’s one other black mark on their balance sheets: the little matter of their role in the financial meltdown of 2008, an episode of massive hubris from which we’re all still trying to recover.
No director of any board of these big banks has been prosecuted, or appears remotely likely to be prosecuted. True, a couple have been stripped of their honorary titles and some have been forced to resign, but considering the catalogue of disasters over which they presided it’s more like being slapped on the wrist by a gnat. People and firms struggling to survive through the last five years of austerity must wonder about the sheer injustice of it all.