DAMNED if they do, damned if they don’t: that is the choice facing regulators as they deliberate whether to bring down the curtain on the multi-billion-pound stream of claims for the mis-selling of payment protection insurance (PPI).
The officially unacknowledged deal being discussed by the banking industry and the Financial Services Authority (FSA) is for a final cut-off for claims of this coming summer, or autumn at the latest.
The banks’ quid pro quo is understood to be that they would foot the bill for a massive 11th-hour advertising campaign to let the public know that a definitive end-date looms.
It is a sensible idea. The compensation for mis-selling PPI – the banks have set aside nearly £13 billion so far – is richly deserved. It was yet another scandal to engulf the banking industry and was only forced off the front pages by revelations about the fixing of the inter-bank lending rate, Libor.
But it is reasonable to eventually remove a cloud hanging over the whole industry to stop claims and uncertainty dragging on endlessly. Many experts even now believe the total cost to banks for mis-selling PPI is likely to come to £25bn.
When we are trying to get the banks to drive a British economic recovery again, having a completely open-ended scandal and compensation framework is counter-productive.
The FSA’s dilemma is over how to allow banks to draw a line under their exposure to PPI after a reasonable period, but not at the expense of giving customers a fair deal.
PPI, complete with a flood of ambulance-chasing claims companies, is surely an issue that has run its course – after all, the scandal got its first airing in 2011.
If people feel they were improperly sold such policies – even just possibly duped – it is not unreasonable to ask them to put in a claim between now and the summer. This is particularly so if consumer minds are focused with the help of one last major advertising campaign to warn them their window of opportunity is to close at a definite date.
PPI was greedy, irresponsible banking. But there comes a time to move on for the greater economic and society good, and we have reached it.
Getting the measure of Wetherspoon’s success
PUB group JD Wetherspoon says it focuses mainly on sales, not profit margins. And its 8 per cent rise in sales in the festive period shows it is making a good fist of it.
There is knee-jerk slavish adherence to progressive margin growth, particularly when in a tough economic climate. Margin is a metric of efficiency, but it is not the only way to judge management. Strategic expansion – Wetherspoon has more than 800 pubs now – and its bond with consumers in a downturn because of low prices should also not be ignored.