David Prosser: Will no one rid us of these villains?

Have you ever watched the hour-hand of a clock and tried to spot it moving? After a while, you know that it must have done because it's no longer in quite the same place, but the movement was so slow that you never saw it happen.

Trying to follow the snail-like progress that watchdogs are making in cracking down on the great payment protection insurance scam is a similar exercise, but the other way round. Every few months, you do see a movement - such as this week's decision by the Office of Fair Trading to refer the PPI sector to the Competition Commission - but the whole thing nevertheless remains stuck in the same place.

Just to recap; it was September 2005 when Citizens Advice first made an official complaint to the OFT about the PPI industry. (Consumer groups had been warning of problems with PPI for years prior to this, but the watchdogs never saw fit to investigate of their own accord.)

There are two basic problems with PPI, which banks and credit-card providers have used for years to rack up huge profits. First, when borrowers buy the cover alongside their loan or credit card - lenders often sell it almost automatically - they pay hugely over the odds for it. Such policies are 10 or more times more expensive than identical cover that is available from independent insurers.

That's bad enough, but the second flaw is even more fundamental - the insurance is just not very useful. The policies are supposed to cover your debt repayments if you can't work due to ill health or unemployment, but they are riddled with exclusions. For most people, other types of cover would be more suitable.

Lifesearch, one of the few independent financial advisers that specialise in helping people to buy protection policies, thinks that this second issue may be missed amid all the debate about the rip-off nature of PPI. As the firm puts it: "Cheap rubbish would still be rubbish."

Still, at least the OFT had to investigate after Citizens Advice made its complaint. The regulator took more than a year to work out what everybody else already knew, but last October it finally announced it had found major flaws in the way consumers were sold PPI.

Unfortunately, the watchdog then had to give everybody a chance to respond to its findings - hence the delay of another three-and-a-half months before this week's referral.

So are we now in a position to stop consumers being ripped off? Of course not. The Competition Commission must now conduct its own inquiry - and that could stretch out for a further two years.

Other regulators are taking their time, too. The Financial Services Authority, which is supposed to police sales of PPI, somewhat belatedly announced last year that it was looking closely at the industry. So far, however, it has fined just one large provider.

It is difficult not to despair at this sorry state of affairs. In one corner, you have the hugely powerful banks and credit-card companies systematically selling a product that is overpriced and often unsuitable. In the other sits a team of regulators for whom wading through treacle would feel like a breathtaking sprint.

* Given the PPI debacle, I was particularly amused this week to see that the FSA has requested a 10 per cent increase in its budget for next year. It now wants more than £300m a year to pay for all that good work it does protecting us from financial villains.

A closer look at its budget proposal reveals that the FSA intends to spend much of the extra cash on consumer education, one of the priority tasks in its brief from the Treasury.

It's a worthy cause, I suppose. If we can't trust regulators to put a stop to scandals such as PPI, they'll at least be putting some money towards teaching us all how to protect ourselves. It's an odd day when a watchdog tries to pass on its guard duties to its masters, but there you are.

d.prosser@independent.co.uk

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

    £16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    Day In a Page

    The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

    They fled war in Syria...

    ...only to get stuck and sidetracked in Hungary
    From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

    Title sequences: From The Prisoner to Mad Men

    Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
    Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

    Giorgio Armani Beauty's foundations

    Sumptuous fabrics meet luscious cosmetics for this elegant look
    From stowaways to Operation Stack: Life in a transcontinental lorry cab

    Life from the inside of a trucker's cab

    From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
    Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

    Kelis interview

    The singer and sauce-maker on cooking for Pharrell
    Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

    Cameron lowered the flag for the dead king of Saudi Arabia...

    But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Humanity must be at the heart of politics, says Jeremy Corbyn
    Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

    Joe Biden's 'tease tour'

    Could the US Vice-President be testing the water for a presidential run?
    Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

    Britain's 24-hour culture

    With the 'leisured society' a distant dream we're working longer and less regular hours than ever
    Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

    The addictive nature of Diplomacy

    Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
    Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

    Fashion: Ooh, Lady Chatterley!

    Take inspiration from DH Lawrence's racy tome with equally racy underwear
    8 best children's clocks

    Tick-tock: 8 best children's clocks

    Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
    Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

    Charlie Austin: ‘If the move is not right, I’m not going’

    After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea