Can a leopard change its spots? GE Money, the UK financial services company owned by the giant US conglomerate General Electric, would like you to think so. For years, the company kept a low profile, but when it did make the headlines, it was almost always as the provider of hugely expensive store cards.
Then two years ago, GE Money decided it wanted a more direct relationship with British consumers, and its PR chiefs realised a more positive image was needed. The company went through a rebranding exercise and introduced consumer-friendly initiatives, such as a financial education website. It also launched a range of credit cards and personal loans, which have consistently been priced competitively.
So far, so good. But this week, the Financial Services Authority (FSA), the UK's chief City regulator, announced it was fining GE Capital Bank, the company's store card operation, more than £600,000. The FSA said GE had failed to ensure it had proper controls for the selling of insurance, and that it had failed to treat customers fairly.
At the heart of the case is the tawdry business of payment protection insurance (PPI). The FSA is now conducting a long-overdue investigation of how lenders have been increasing their profits through the sale of PPI alongside credit cards, store cards and loans. All too often, the insurance turns out to be vastly more expensive than similar cover on offer from independent sources, or, in the worst cases, completely unsuitable.
Just to be clear, the FSA is not saying GE has mis-sold PPI. The fine reflects the fact that after GE was warned, in early 2005, that its sales practices did not comply with industry rules, it failed to improve its sales controls and staff training. GE also failed to contact customers who had previously been let down.
This isn't a minor case. "At any one time, approximately 300,000 retail assistants employed by [retailers'] stores are permitted to sell insurance on behalf of GE," the FSA points out. "In 2005 alone, over 850,000 policies which included PPI were sold on its behalf."
GE also seems to accept it was caught red-handed. It agreed to settle the case with the FSA at an early stage (and received a 30 per cent discount off what the fine could have been).
I must confess to a personal prejudice against GE. Several years ago, after a close relative moved house and forgot to pay a store card bill - for less than £100 - GE engaged a debt collection agency to track her down. The agency caused huge upset, plagued her with anonymous phone calls and even sent her postcards purporting to be from a long-lost friend.
My personal animosity aside, however, this PPI fine teaches us an important lesson about companies such as GE. Their PR departments may talk a good game - and marketing departments can work wonders with new brands - but actions speak louder than words.
* Finally, energy companies are beginning to talk about lowering their prices. In addition to nPower (Deals of the week, page 6), Scottish & Southern has now promised to cut bills, though it hasn't said by how much and when. British Gas has also been talking about lower prices from April.
These cuts are long overdue. Energy providers blame the high cost of wholesale gas for higher bills, along with the fact they must buy in supplies six months or so in advance. But wholesale gas prices have been falling for more than a year now. And it's no coincidence that many of these companies have racked up huge profits.
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