PPI should bother shareholders
The PPI saga should obviously bother consumers – but it should bother shareholders too, says Merryn Somerset Webb.
I took out a mortgage in 2000. Before signing, I noticed something called mortgage insurance being added to my monthly payment. Things were tight already, it seemed very expensive, and I didn't want insurance. So I went back to the broker and asked to have it removed. You must have it, he said. What if you die? There is no what if, I said. I haven't any dependents. What if you get a terminal illness?, he said. I'll sell and move back to my mother, I said. He tried a few other things. Then, with him close to tears (he was young), we got to the crux of the matter. You have to take it, he said. "It's how I get paid."
PPI was his main source of income. If he wanted a paychequeevery month, he had to sell mortgages, and then do his best to tag PPI on at the end, at a shockingly high average commission of about 67% of the cost. He was a perfectly nice kid trying to make a living. His employers the ones setting the incentives? Dishonest manipulative charlatans.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The final bill could easily hit £40bn. The whole saga should bother consumers asking anyone to help you with your money involves huge amounts of trust. Seeing that so comprehensively abused is very trying. But it should bother bank shareholders just as much. Every time something like this happens, the UK's financial providers promise to improve their corporate cultures; to put their clients' interests first; and to cut the risk of their profits being slashed by fines and compensation in the future. They never actually do it. This week, Citizens Advice called for credit card providers not to raise card limits presumably to tempt people into taking out more debt than they want without asking them if they would like the "service" first. It seems it takes more than £40bn to turn a culture that tolerates dishonest manipulative charlatans into one that does not.
PS If you think you may have a PPI claim and aren't sure how to get started, go to FCA.org.uk. It's very straightforward.
-
HMRC stamp duty crackdown sees probes of property deals jump 88% – what to watch out forFrom bogus stamp duty refund claims to misleading the taxman about who owns a property, HMRC is increasing its scrutiny of stamp duty land tax reporting. Here’s how.
-
The UK areas which saw biggest jump in asking prices in 2025 – is yours on the list?We look at the UK areas where asking prices rose the most last year.
-
Inflation may be slipping but there is still plenty of misery aheadEditor's letter Inflation may be a little lower than last month as the prices of petrol and diesel fall back, but it remains structural and long-term, says Merryn Somerset Webb. And there are no painless solutions.
-
Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
-
How to tackle rising inflation and falling stockmarketsEditor's letter Inflation is rising around the world. Even though inflation is widely expected to return to around 3.5% next year, it is still wreaking havoc. Merryn Somerset-Webb explains what to do about it.
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
