Are we a nation of fraudsters? James Walker explains.
24/09/2018 Resolver's founder, James Walker, examines recent comments regarding PPI claims.
Every now and then, a senior executive at a big business goes rogue. Sometimes this is due to an ill-thought-out joke (like a gag about the quality of jewellery at Ratners that killed the company), or being ill-prepared (pulling out a wad of £50 notes at your minimum wage warehouse). Mostly though, it’s when a chairman or chief executive decides to take a combative stance against a threat to the business.
So when Barclays chairman, John McFarlane, decided to take on the mass mis-selling of PPI in an interview with the Mail on Sunday, he was targeting the fallout of the biggest mis-selling scandal of all time. Unfortunately, his choice of words labelled huge swathes of the population fraudsters:
Needless to say, this hasn’t gone down well. Consumer rights champion Martin Lewis described the comments as ‘outrageous’ – and he wasn’t alone.
So is this a moment of boardroom madness, or is there more too it?
Put simply, labelling all your customers fraudsters is a spectacular mis-step. And it’s also factually incorrect. Here’s what’s true:
Claims management companies have undoubtedly made numerous ‘speculative’ complaints where people who don’t know if they have PPI – and may never even have been a bank customer. This is absolutely unacceptable and has undoubtedly increased bank costs.
But the blame lies with the claims managers, not with the rest of us. These firms contact people and mislead them in to making claims. It’s not a case of people just taking a punt on getting some free cash. We’ve all had text messages and calls with (false) claims about money we’re entitled to. That doesn’t make us fraudsters, that makes us targets form money-grabbling claims managers.
So what’s false then?
Well, firstly, PPI claims aren’t ‘free money’. You have to make a complaint about the policy and whether it was suitable for you. MSE and Resolver’s free complaints tool prompts you to think about your circumstances when the policy was taken out. The fact that you had PPI doesn’t mean it was automatically missold. But lots of other factors do, including:
- If you were self-employed
- If you weren’t working or were on benefits
- If you weren’t told the policy was optional
- If you didn’t want PPI but they stuck it on anyway
- If the sales process was mis-leading
...and loads more situations too.
So was every PPI policy mis-sold? Of course not. The Financial Ombudsman was upholding on average around two-thirds of cases, which demonstrates that PPI was widely mis-sold - but not in every case. And in some cases, there’s simply not enough evidence to uphold the complaint. So to suggest that we’re committing fraud by making a legitimate complaint is misleading in the extreme.
The industry regulation, the Financial Conduct Authority (FCA), estimates that up to 64 million PPI policies were sold. The fact remains that poor selling practices were rife in the industry at the time. If banks wanted to object to mis-selling claims then they could have, and still can go, to the courts. In fact, they did – and lost.
Come 29 August 2019, all of this will be over anyway. On that date, the FCA has said PPI complaints will come to an end. The irony about outbursts like the one that came from Barclays, is they give a huge reminder to everyone who’s not complained, that there’s still time.
By James Walker, Resolver Founder.