What Else Are They Hiding?

Back in 2007 it became all too apparent that for years, banks around the globe had been trading irresponsibly. In the space of a year, something in the region of thirty global banking organisations went from operating normally to teetering on the brink of oblivion. The consequences of this fall from grace are well documented and continue to be felt by ordinary people all around the world as unemployment, higher taxation and low interest rates begin to erode the money in our pockets.

The warning signs of the crisis were there to be seen, if you chose to look hard enough, but you didn't have to be Vince Cable to see them. There were plenty of symptoms of the ongoing corruption that anyone could spot.

As early as 2006, thousands of people were successfully reclaiming bank charges by arguing that they were unlawful penalties. These were the charges levied by banks for each bounced direct debit, bounced cheque or for each transaction that exceeded an overdraft limit. Charges were, at that time, typically around £30 or £35 each, and it was not unusual for a bank to make multiple charges for a single infringement, for a bank to charge against transactions that they were able to block, or to refuse a transaction for less than £30 only to then levy a charge of £35. They were sneaky and underhanded practices that punished those most in need of help, like people on low incomes and individuals suffering temporary financial problems beyond their control. Banks justified their practices using a number of excuses, and defended them in court by claiming that the charges recovered additional administration costs. At one stage extra admin costs for these functions were estimated to be somewhere between zero and £6 per transaction. Most banks continue to charge over £10 per fee, and many continue to charge almost double that.

In addition, there are thousands of PPI (Payment Protection Insurance) policies may have been mis-sold. Payment Protection Insurance covers the policy holder in the event of redundancy or illness. However, many of the policies have been taken out without the borrower's knowledge or consent, have been sold when not needed, or been sold where the policy didn't apply so that the borrower could not actually make a claim.

There have also been multiple complaints about other products being 'sold' without the borrower or account holder's knowledge. Most banks now have privilege accounts that include extras, such as holiday insurance, mobile phone insurance, breakdown cover and more. For these so-called services, the banks charge anywhere from £10 to £20 per month, adding up to somewhere between £120 and £240 per year. If you don't take a holiday abroad, don't have a mobile phone (or have home contents insurance that already covers your mobile phone), don't drive a car or pay separately for breakdown cover, this is money. It is better in your account than in your bank's pocket. Even if you do take advantage of one or two of these add-ons, you are still probably paying well over the odds for the product.

Today I read that the British Bankers Association is seeking a judicial review of new rules that are due to come into force on the 1st of December designed to prevent these kinds of practices and to ensure those that have been mis-sold PPI receive refunds. The BBA's reasoning for seeking a judicial review is that they believe the new rules are illegal. It seems the actual reason for the review is that the banks are concerned that they could be forced to refund billions in mis-sold PPI policies, but worse, that this could then set a precedent that would open the doors to refunds for other mis-sold products. It makes me wonder what else the banks have swept under the rug that might be a liability for them.

The fact is that practices that have been employed by most, if not all of Britain's banks, have left them horribly exposed to liability and litigation. These practices may not have been systemic, but the were certainly endemic. They were callous, ruthless, devious practices that were possibly encouraged and, when complaints started to roll in, were certainly ignored. The banks made a mint off unsuspecting customers and in many cases refused to issue refunds when they were caught out. This is a mess that is of the banks' own making. It's time they accepted the legacy that they have made for themselves. An apology for their collective arrogance wouldn't go a-miss either.