[Guest Post] Tales of a PPI Claims Handler – Delay Tactics, Low Refunds and Billions Saved in Compensation

Time was when a compensation case went one of two ways; no payout or full payout. But part nationalised bank, Lloyds, and other lenders are avoiding expensive mis sold PPI refunds by using a third option – a partial payout.

As you read this ‘upheld in part’ is being printed on thousands of refund letters in bank offices across the UK and it’s being used to save billions of pounds in compensation.

Limiting the damage

We’re seeing more and more ‘upheld in part’ mis sold PPI offers from banks with around 10% off the full refund amount. It may not sound like much but take 10% off the estimated total refund bill and you’re looking at a saving of over £2bn. With £18bn set aside so far for PPI refunds and the total refund bill estimated at anywhere between £25 and £40 billion, UK banks and lenders are looking at a lengthy and costly period of payouts. By handing out partial refunds it looks like Government-owned Lloyds and other banks have decided to try and limit the damage.

What ‘upheld in part’ means

In an ‘upheld in part’ situation the lender admits to mis selling the entire PPI policy but decides that you should have had some cover and takes the cost of that cover from the refund. It’s like taking a £30 shirt back that you don’t want and the shop giving you £15 and another shirt of it’s choosing, saying that it still thinks you need a shirt. Ludicrous.

What they should be doing is giving you all of the money back or asking ‘do you want us to take the cost of a more suitable policy?’. The (even more) ridiculous thing is: while it may be acceptable to offer another policy if the loan is still active, in most of the cases we come across the loan has been paid off so any cover charged for is completely unnecessary.

An example from a refund letter, this customer had three loans with two ‘upheld in part’ and was owed an additional £1,400 including interest.

It’s easy to think you’ve been fully refunded (and hard to get to the truth)

If the refund letters adequately explained what ‘upheld in part’ means it wouldn’t be so bad, but in my opinion, they don’t. As a result the recipient could easily miss the fact that they have not been refunded the full amount. The picture above shows a refund amount, which may lead people to think that they have received their full PPI refund. In reality they have not only been done out of money that they paid into the policy, but they’ve also not been paid the 8% interest on top as well. A double slap in the face.

To clarify what they’ve done the banks should include a sub-header in the letter titled ‘upheld in part explained’ with a paragraph explaining that they’ve decided that we did mis-sell you PPI, but think that you should have had some cover. As a result we’ve taken some money off your refund to cover the cost of a more suitable PPI policy. It’s still not right, but at least it would be explained and the customer would know that they haven’t got a full refund.

On their radar

The MOJ is aware of ‘partial refunds’ and recently included the topic in their December ‘13 Special PPI Bulletin:

Alternative redress

Some banks have been making offers on an ‘alternative redress’ basis/calculation on PPI complaints since early 2013. This is sometimes also referred to as ‘comparative redress’ or ‘partial upheld’.

These offers need to be properly assessed and instructions from clients should be obtained about whether the offer is appropriate. Further information about alternative redress offers can be found on the FOS website at – http://www.financial-ombudsman.org.uk/publications/technical_notes/ppi/redress.html

No going back

But say you knew what ‘upheld in part’ meant and that you were still owed more mis sold PPI money – do you take the smaller lump now or wait potentially another 18 months for the full amount? In our experience most people go for the smaller amount mainly because they may have to wait a while for the full refund.

And once they accept the offer there’s no going back, the bank has the right to keep the extra cash. Either way, if people take the payout or wait for the full amount the bank are saving money – when they should be giving people all of their money back. Moral of the story: beware of ‘upheld in part’ offers and know that if you get one – you are still owed more.

By John Gregory

John writes for a PPIClaimsAdviceline.com as well as a number of financial blogs, he also create content for infographics, FAQ’s and personal finance sites. You can find him on Google+ and Twitter, get in touch – he doesn’t bite. Unless you’ve been mis-selling financial products.

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Is Cash Going Out of Date?

Back in the day, the Queen was the only one with the luxury of not having to carry cash around with her. Whenever she got a hankering for a good smoky bacon crisp sandwich some subordinate or other would do the buying for her while the Queen stood, dignity intact, browsing in Morrison’s frozen food section. These days though, it seems no one carries cash. We’ve all moved on to plastic. With so many options available, including credit cards, debit cards, store cards and Christmas cards (not yet a currency, but still closely linked to the ancient barter system), few people bother with the actual pounds and pennies anymore. Moreover, cash in the wallet simply begs to be spent, while a payment card can restrict the temptation by lightening the pockets, helping you better manage your bank accounts.

To illustrate how in danger cash is, here are some facts and figures.

It seems cash has been in crisis mode since at least 2010. For it was in the summer of 2010 that debit card spending overtook the total spent in cash. Debit card spending came in at a tidy £272 billion with cash spending at £269 billion. It was a tight race, sure, but one that cash seemed destined to lose. Especially when you throw credit card spending into the mix, at that point the contest between cards and cash becomes pretty one sided. And debit card spending continues to grow. In 2012 debit cards were used to make 7.7 billion purchases, with the number of debit card holders increasing by around a million.

Of course, credit card use is on the up too. There are over 30 million credit card holders in the UK now. And the amount of credit card purchases is expected to rise to 3.5 billion by 2022 with total spend coming in at about £214 billion.

Still, credit and debit cards shouldn’t be feeling too smug. Just as it seems that they are about to be become the transaction kings (or to cast aside their current truce and engage in a vicious fight to the death) along comes the new pretender to the throne: contactless payments.

If carrying cash is too cumbersome and plastic is the practical alternative, how convenient would it be to carry nothing at all? Really convenient. OK, you’d need to have your mobile on you, but you’d have that anyway. Unless you forget it, then you might be in trouble.

The idea is that instead of carrying cards around with you every single place you go, taking up all that space and weighing you down like a dumbbell or a practically invisible feather, you just scan your phone (which is linked to your bank account) and the money disappears from your account. Like magic.

The technology has been around since 2007 and the time seems right for contactless payments to stake its claim as the undisputed king of paying for things. Especially when you consider just how smartphone crazy we all are in the UK – another excuse to use it more is always welcome. Credit and debit cards are getting in on the action in this arena though, with their own form of contactless payment where you can wave your card over a card reader, rather than using the more traditional chip and pin or swiping method. Still you’re not really fooling anyone; you still have to carry those pesky cards around. And if predictions are to be believed, the mobile payment is the only way to go. You can then say goodbye to all those dozens of coupons and points cards too – the mobile offering (namely Google wallet) will eventually encompass these too.

Only certain phones are enabled with the contactless payment option built-in, although there are all kinds of apps available to enable it on your click and talk device of choice. In fact, in a recent article in the Telegraph futurologist Peter Cochrane predicted that by 2020 cards could have disappeared completely as a payment device. Where physical cash will end up by the time 2020 comes around, well, that remains to be seen. The suspicion is that while cards might be king at the moment, cash will hang on in there in some form or other (probably just its current form), ultimately beating out card payments with its durability.

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Lloyds Fined £35m for Dickensian Sales Incentives

Lloyds bank has been fined £35m for a sales incentive scheme that saw staff threatened with demotion if they didn’t hit targets. One adviser felt so pressured that he sold products to himself, his wife and a colleague just to keep his job.

The Financial Conduct Authority (FCA) Regulator issued the fine after saying Lloyds ‘created a culture of mis-selling by rewarding staff for selling thousands of products to customers regardless of their need or suitability’.

Sales incentives at Lloyds were deemed to be inappropriate and detrimental to customers

The fine is the ninth biggest ever issued by the City regulator and came as a result of an investigation into incentive schemes at Lloyds between 2010 and 2012. The bank recently pumped a further tranche of cash into their PPI compensation pot, which stands at around £8bn and is the biggest refund bill of any UK lender.

The investigation focused on Lloyds’ sale of investment products and found advisers were offered champagne and £1000 cash for hitting sales targets. The FCA investigation uncovered the following figures between 1 January 2010 and 31 March 2012:

– 399,000 Lloyds TSB customers bought 630,000 products, spending over £1.2bn and paying £71m in protection premiums

– 239,000 Halifax customers bought 380,000 products, spending £888m and paying £38m in protection premiums

– 54,000 Bank of Scotland customers bought 84,000 products, spending £170m and paying £9m in protection premiums

Some of the individual bonuses received by staff are eye-watering, including one Halifax manager that received £39,000 for three months sales, almost doubling his annual salary. Another controversial product, packaged bank accounts, were rumoured to be being investigated by the FCA, but they refused to comment. Lloyds stopped selling packaged accounts at the beginning of 2013.

Good news for tax-payers though as the Government-owned bank was able shave 20% off the £35m fine buy settling earlier with the regulator.

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