Jim Duffy comment: Admin fee charges are a rip off which must stop

We are not quite there yet, but the PPI adverts on the TV, radio and newspapers are almost coming to an end.

Jim Duffy: 'Admin fees are quite simply a racket'. Picture: Ian Howarth.

Yes, PPI has certainly cost the banks dear and who knows, they may learn and never go down that route again. But, there is a new “scam” that we have all taken for granted as it is foisted upon us by big corporates. It’s expensive, just as useless and was created to generate profit for shareholders.

What is this charging mechanism that has permeated all we do when dealing with big corporates? It’s called the “admin fee”. And it is time we called a halt to it.

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The worst culprits of all in using the admin fee to create profit are insurance companies. Yes, the banks will charge an admin fee for a mortgage and I do have to ask myself: why? You already have everything set up to do business and will immediately make money when you lend me the cash. Nevertheless, we want that mortgage to upgrade to better bricks and mortar, so we pay the fee involved to secure it. But when it comes to simple insurances I do feel the policy providers are at it.

I recently had to cancel my policy with a well known multi car insurance provider. I had been a loyal customer for more than six years with no claims whatsoever. I had accepted my increase in annual premium each year, despite my car reducing in value and my “wisdom” increasing. No more boy racer antics, just plodding along with all that massive driving intuition gained through years on the road. Yet my premiums went up. Ah well, maybe that’s life these days.

But, when I called up to cancel my policy because I had sold my car I was hit between the eyes with a whopping fifty quid admin cancellation fee. And I simply had no choice in paying it as somewhere in the minutia of the terms and conditions, that one needs a Philadelphia lawyer to decipher, it says there will be a cancellation fee.

C’mon insurance companies! We both know it costs nothing to hit a button and cancel my insurance. Mind you, there is exactly why these companies are adding the charges. Why should they get nothing when they can get away with charging a fee... but, there again, why should they get anything?

If I cancel other expenses and direct debits, I don’t get charged. Yet the insurance companies feel the need to profiteer, despite all my years of being a great customer.

And please don’t tell me that a larger number of people cancelling policies affects your cashflow. You already have sophisticated algorithms and risk analysis built into your premiums to counteract cancellations and changes in people’s circumstances. That won’t wash this time.

PPI was quite literally a con. It has since been dealt with severely. Now is the time for MPs, MSPs and regulatory bodies to scrutinise how consumers are being charged for admin of our insurance policies, many of which we are required to have by law. That one has always perplexed me. I’m required to tax my car, so the government sets up a website and I pay a fixed fee. But when it comes to insurance, I have to cope with the vagaries of the markets, and the providers’ need for profit. Does something not quite add up for you here?

Admin fees are quite simply a racket. They are unfair on us and if we do not make a stand, we will only get hit with more and more. After all, while admin may be boring there is much creativity in introducing new charges. And no doubt bonuses for those who do.

So, if there is any MP or MSP out there who has time on their hands and wants to be a people’s champion, then insurance company admin fees is a good place to start. I bet you a pound to a penny you would get massive support from us consumers, who are being royally stuffed when things change in our lives.

Or even better, an insurance company CEO who actually wants to do the right thing. Now wouldn’t that be refreshing....

Jim Duffy MBE, Create Special.