Julian Knight: A billion reasons why this racket won't be buried
Sunday 08 June 2008
The Competition Commission is taking the payment protection insurance industry – or racket, as I prefer to call it – to task.
In what was one of the most strongly worded statements I can remember from the commission, PPI was rightly condemned as overpriced and the industry as a whole as uncompetitive. As a remedy, the commission has suggested price capping.
I can tell the insurance and banking sectors know they are in trouble over this because their response has been measured – bordering on the apologetic.
I can imagine the gritted teeth of Angela Knight (pictured), chief executive of the British Bankers' Association, as she stated that the commission's report provided "food for thought".
Meanwhile, the Association of British Insurers said that the industry had put its own house in order of late and that the commission's conclusions were based on a long-distant reality.
This is total hogwash. PPI is not only expensive, as the commission concludes, but routinely mis-sold, as a series of fines from City regulator the Financial Services Authority have shown.
The sales processes, based on commission, fail consumers and the product itself is a very poor one when compared to the other types of insurance policies that will pay out if you become ill or lose your job.
PPI is a product that should be confined to the dustbin. Simply, it is beyond reform. However, this won't happen because too much money is at stake – billions in profit.
The commission is talking tough but what comes out in the wash may be different. I remember a few years back when it took on high-street electrical shops over the sale of massively overpriced extended warranties. Big changes were promised then but walk into a big electrical retailer now and next to nothing has changed – you are still pestered to take out poor-value extended warranties.
In short, I think PPI will continue as a racket that keeps piling up the pounds for banks and insurers.
Be a savings tart
The credit crunch does have an upside after all: the banks want your money and they are willing to pay for it.
The Halifax unveiled a regular savings account last week that pays a bumper 10 per cent. And unlike some other high-interest offers, this deal doesn't require that people taking up the offer must also have a current account with the bank.
However, as with all things money-related, there are caveats. In this case, the 10 per cent offer only lasts a year, after which time the money is swept up into any one of six different accounts all paying a much lower rate of interest – in one case a paltry 2.07 per cent.
The message here – and it applies to all the eye-catching high-interest offers currently coming from the deposit-hungry banks – is to be an active consumer. Take the banks up on their offers but don't then forget about your cash. Constantly review what's available on the market and, when a good deal comes to an end, move away immediately to the next one.
A few years ago when the banks were trying to tempt us all to take out credit cards, they used 0 per cent introductory offers as bait. This gave rise to a whole new type of consumer – the "rate tart". These were people who took up the zero- rate offer and as soon as the deal expired hooked up with another one.
The days of the rate tart are long gone on credit cards, but there's nothing to stop consumers turning the same trick with savings accounts.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Olympic diver has made his modelling debut for Adidas
- 1 Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
- 2 Scottish independence: Learn from Quebec's mistakes and beware of promises. Vote Yes.
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 Revealed after 75 years of secrecy: 'Fifi' the glamorous WW2 special agent who tested British spies' resolve
- 5 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Portuguese academic says British are 'filthy, violent and drunk'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
iJobs Money & Business
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...
£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...
Day In a Page
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony