Simon Read: The scoundrels at our banks look for more ways to avoid paying out

A new row about the payment protection insurance (PPI) mis-selling scandal erupted this week after Britain's banks called for a deadline to be set on complaints.

The British Bankers' Association contacted the City watchdog – the Financial Services Authority (FSA) – begging for a time limit on compensation to be set which could be as early as next year.

With the bill for compensation expected to top £15bn, it's understandable that the banks want to bring the sorry affair to as early a conclusion as possible.

But their effrontery in asking for a deadline is astounding.

Apart from the fact that it comes across like yet another naked attempt to keep their customers' money for themselves, there are two key facts worth considering when deliberating this issue.

The first is that the scandal only came about because banks deliberately flogged useless cover to everyone they could.

In fact there was a time, it seemed, when they were more focused on boosting profits from rubbish insurance than actually providing any banking services.

If their crime of mis-selling to millions wasn't bad enough, let's then consider how they reacted when caught ripping people off.

The case against them was rock solid. They were caught and told to pay compensation to those people they had ripped-off. They did everything but that.

Rather than playing fair they resorted to red tape and legal battles to delay making any payouts. In fact it took around seven long years from the original super-complaint about PPI from Citizens Advice before the banks stopped trying to wriggle out of their duty and started payouts.

Even then – with one or two exceptions – they appear to have continued to be obstructive making it as difficult as possible for people to claim for what is rightfully theirs.

So with millions of people still smarting at the banks' tedious delaying tactics, it's a little rich for those same institutions to suddenly turn round and demand that things are speeded up.

My view is that banks – and the building societies found guilty of mis-selling – should be forced to ensure that all customers disadvantaged by their actions are repaid cash. It should be incumbent upon the institutions to put things right and to be heavily fined if even one person is found to be left out of pocket at the end of the process.

Sadly, the FSA didn't have the balls to do that. But I'm glad to report that it appears to be treating the banks' demands with some disdain.

While the watchdog said it is prepared to "consider the merits" of the proposal, the FSA stated that it would need to be convinced that it would be in the interests of consumers.

I can't think of any positive reasons for giving consumers a deadline for claiming money that is theirs. So I would hope that the FSA doesn't allowed itself to be persuaded by any clever lobbying by the desperate banks.

The watchdog did add that it would only consider a deadline on claims "if the banking industry funded a sufficiently widespread advertising campaign to ensure consumers are aware of the PPI issue and how to complain".

That in itself should kibosh the proposal as it would mean banks putting their hands in their pockets to the tune of tens of millions of pounds if a proper and effective advertising campaign was launched.

Two years ago I wrote in this column: "It's time banks stopped clutching at legal straws.

"Trying to avoid giving proper redress to customers you've treated badly is the sort of behaviour you'd expect from scoundrels."

Two years' later it's very disappointing – but not unsurprising – to report that banks are still behaving like scoundrels over the affair.

s.read@independent.co.uk

Twitter: @simonnread

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