In a similar way that I know we can’t trust our two year old on his own with a set of colouring pens and a cream carpet, we still can’t trust our banks with financial products.
The Financial Conduct Authority (FCA) has put together a £1.3bn redress scheme for seven million banking customers who were mis-sold credit card insurance.
This monster bout of mis-selling took place between January 2005 and March 2011. It actually started earlier than that, but the FSA only started regulating this type of insurance in 2005.
Barclays, Santander, Royal Bank of Scotland, HSBC and MBNA were all flogging credit card insurance policies from Card Protection Plan (CPP), which was fined by the regulator last year for mis-selling offences.
At the time, the Financial Services Authority revealed it had found widespread mis-selling of the two main products offered by CPP, card protection and identity protection.
CPP also failed to provide clear information to its customers or treat them fairly.
In many cases, credit card customers already had adequate protection from their banks, so simply didn’t need to buy additional insurance products, which really only served to put more revenue into the coffers of the banks.
The £1.3bn redress process is a little convoluted and is explained by the FCA in four steps here.
What this should tell us is that we cannot trust banks to sell financial products.
They should stick to banking and leave the implementation of pensions, investments and insurances to independent financial advisers who take the time and care to match client needs and objectives to suitable products.
You wouldn’t leave a small child alone with colouring pens. You shouldn’t leave banks alone with potentially unsuitable financial products.
