Comment: Another scandal will be along soon

IT’S banking deja-vu all over again. You usually know when the next mis-selling scandal/customer redress bill is due in the sector – soon after top-level public humility in the banks and claims that lessons have been learnt following the last scandal.

In bank product mis-selling and its regulatory nemesis, what goes around comes around with almost metronomic precision.

Regulators have now put the industry in the dock for aiding and abetting specialist insurance company CPP in flogging policies to cover consumers for credit card fraud and identity theft – usually at a cost of £30 and £80 a year respectively. The banks basically acted as an introduction agency for CPP.

The Financial Conduct Authority (FCA) says that customers were “given misleading and unclear information about the policies”. The redress package agreed with the banks and credit card issuers could be as much as £1.3 billion. The 13 involved include Bank of Scotland, Barclays, HSBC, Royal Bank of Scotland and Santander, as well as credit card provider MBNA. One hesitates to say round up the usual suspects, but…

The financial hit for their involvement in the latest scandal will not have a major impact on them, when spread across the sector. For instance, it is dwarfed by the £18bn-and-counting the banking industry has set aside for the payment protection insurance mis-selling scandal.

Rather, it is the relentless attritional erosion of banking’s reputation that is ultimately more damaging. The latest revelations of mis-selling “business-as-usual” makes it even harder to win back public trust in the financial services industry.

We have also had the crooked manipulation of the Libor rate at which banks lend to each other, but which also underpins trillions of pounds worth of transactions including mortgages, the interest added to credit card bills and even small business loans.

Pensions mis-selling, endowment mortgages mis-selling, dodgy interest rate hedging products for small businesses, precipice bonds, the flawed rocket science behind the mis-selling of split-cap investment trust products.

The sheer consistency of the wrongdoing is stark. And when so many banks are involved it shows it is not a case of rogue salespeople but a systemic problem for the industry.

The FCA has already fined CPP £10.5 million over the latest addition to the roll of shameful behaviour, saying the risks people were insuring against were “greatly exaggerated” or was cover they did not need dressed up in unclear language.

We’ve been here more than a few times before. Most probably will be again. Heigh-ho.

High street retailers are carpeted too

MIS-SELLING may not be restricted to banks. Half a dozen high street carpet and furniture retailers are being probed by the Office of Fair Trading (OFT) for using artificially high prices to exaggerate sales and price cuts.

The OFT found many retailers in the sector were misleading customers into thinking they were getting a bargain by artificially inflating the “original” price. We’ve all been there. Carpet “reduced” from £3,000 to “just” £2,000, shirt “was” £35, “now” £22.50. Yeah, who says? The OFT said there were a significant number of products sold by some retailers where no sales at all took place at the fake higher price. A welcome investigation.