A pleasing result for bank scam victims

What's the best way to restore consumer trust in Britain's financial services? I'm not entirely sure there is one at this point. But according to the new chairman of the consumer panel at the Financial Conduct Authority (FCA), Sue Lewis, it comes down to her lot sticking up for "ordinary" customers rather more than perhaps the regulators have in the past. This means looking not just at the very big issues, but also at the things "that irritate people on a day-to-day basis" things such as teaser rates that end without obvious notice, and the over-zealous rejection of insurance claims.

She might be right. But even if she is not only right but acts on her views, it is going to be an uphill battle, given the endless stream of semi-scandals coming out of the industry. Consider, says The Guardian, the "stats that tell the sordid tale".

The latest estimate of the cost of the payment protection insurance mis-selling scandal is nearly £19bn; the bill for mis-sold interest-rate swaps to small businesses is likely to be another £10bn or so; the Libor-rigging scandal has led to payouts of £1.7bn; and pensions mis-selling in the 1980s and 1990s cost the banks £11.8bn. Add it all up and compensation payouts for bad bank behaviour over the last decades comes to about £43.8bn "equal to £700 for every man woman and child in the UK".

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It isn't over yet. The latest scandal is the mis-selling of credit-card and identity-theft insurance. The first sold for around £30 a year, the second for more like £80 a year. And despite the fact that both were almost entirely useless (most people were already covered and the risks were "greatly exaggerated", says the FCA), an extraordinary 23 million policies were sold thanks to a ludicrously exploitative commission-based sales system. Now the banks and credit-card companies have been ordered to come up with another £1.3bn to compensate the buyers.

The good news is, you don't have to do anything to get your money. All the institutions that partnered with Card Protection Plan Limited (CPP), the firm behind the policies (note that Lloyds and Halifax did not), will get a letter explaining how the compensation scheme will work, and another, asking how the policy was sold to them. That done, you should get back the amount you paid for any policy from January 2005, plus a rather nice 8% annual interest payment.

Being mis-sold a rubbish product isn't a good thing. But I rather like this end result: huge numbers of people were effectively forced to save in the good years, and are now getting paid out large cash sums just when they need them most. Note that anyone who had policies every year between 2005 and 2010 could soon see a cheque for £500 coming their way.

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