We’ve just launched our new campaign to Reclaim Mis-sold Packaged Bank Account Fees. While the vast majority of the reception was positive, some decided to lambast, claiming this was just compensation culture. It’s not, it’s far from it, and I’ve five key reasons why…
Yet before I explain, here are a couple of examples of the comments:
I’m getting tired of the compensation culture in this country. If people are stupid enough to sign a contract – sometimes for hundreds of thousands of pounds, without reading the small print and without looking into what is and isn’t covered by PPI/ bank charges, etc – then they certainly do not deserve their money back or any other form of compensation. It’s about time people took responsibility for their own mistakes and stopped blaming everybody else for their stupidity and/ or naivety."
Fed up with all this claim and blame culture it’s doing this country no favours. People need to accept their own responsibilities."
Here’s why I disagree.
1. This confuses ‘reclaiming’ with ‘compensation’
Compensation is when you’re paid money for the failure to act of another firm or individual. Neither bank fee reclaiming nor PPI reclaiming are about that – they’re about reclaiming – getting back the money wrongly or unfairly taken from you.
For me, compensation culture is the overly-litigious push to ask for money from a company when accidents happen, eg, because you spilt milk on a supermarket’s floor, then slipped on it.
Reclaiming is about getting money back, primarily from large, powerful companies who have misused and abused their position and trust to play a fast one on unwitting consumers.
2. You don’t need be stupid to have been mis-sold
Only 50 years ago the bank manager in his bowler hat was a pillar of the community. A paternal figure to respect, with a sense of care and whose word was gold.
Since then, the industry has rapidly morphed into one of primarily commission-driven, sales-based institutions. But many still don’t realise it and, while not stupidly, perhaps naively, sometimes put too much trust in what they say.
Yet it goes further than that. In many cases of mis-selling, people have been lied to. In other industries we’d call it fraud. Here are some typical examples of things people were told by bank officials:
- To get a loan you MUST get PPI – LIE
- This PPI will cover you if you lose your job (to someone who’s self-employed) – LIE
- The travel insurance on this account will cover you if you have a problem (said to someone aged 66 when the maximum age is 65) – LIE
- Don’t worry, just because it’s not in the terms, you will be covered – LIE
Are people wrong to take something told to them as fact by a representative of the company? No, of course not. That’s why financial firms have a duty to ensure products are appropriate, if they breach that, then customers are entitled to their money back.
Even in the Facebook discussion that prompted this blog, there were plenty of posts that fit this category, such as…
I have never used any benefit from my packaged account. I was told after internet fraud on my current account that they had to close an existing account and change it to a package one. I didn’t have a choice at all as my old account was obsolete."
That is simply not true. The customer service representative deliberately upsold with a lie. Yet people are scared of financial products and don’t challenge it. However, while spin is one thing, if people lie point blank, how do you control that?
3. Reclaim culture is a deterrent
How do we encourage financial institutions to behave better? The FSA fines them, what, £100,000, or even a million pounds? But do you really think that stops them? With PPI they were making billions each year. Those fines were trivial compared to that, and were no real disincentive.
Yet launching major reclaiming campaigns, however, is an entirely different game. Bank charge reclaiming saw four or five billion being given back, PPI is estimated to be around £13 billion and counting. These types of numbers make the banks sit up and take note. It’s bad for business. That is a true deterrent.
4. Don’t confuse vulnerable and stupid
While it’s easy for intelligent, literate, web-savvy people to say "if people are too stupid to realise, it’s their fault", I don’t subscribe to this Darwinian theory of finance.
Are we honestly saying that if you’ve mental health issues (one in four of the UK population), lack mental capacity, suffer dyslexia or dyscalculia so aren’t good with forms, have literacy or educational problems, then it’s fine for banks to simply take advantage? I find that hard to stomach.
For more on this, read my A blog in defence of stupid people’s rights blog.
5. MoneySaving is about taking responsibility
None of this detracts from the fact that where they are capable, individuals should take responsibility for themselves, educate themselves and make the right decision. My entire career and this site has been dedicated to facilitating people in doing that.
Yet we need to accept that we are still a primarily, financially illiterate nation – and confusion marketing takes advantage. It’s one of the reasons I continue to campaign for financial education on the national curriculum. While it won’t be a panacea, and will take time to make things change, there’s no better place to start.
If I were to navel-gaze and say, "do we ever stray close to compensation culture in our content?", then it certainly wouldn’t be with PPI or packaged bank account reclaiming.
Closer is our Delivery Rights guide, where we say if you have had to take an extra day off because of a no-show delivery, charge them for your time. Yet even here, this is a deliberately conscious campaigning choice.
When we first wrote it, I ensured that right at the top we explained this was about trying to clean up the notoriously-unreliable delivery industry. By consumers pushing hard when they inconvenience us, my hope isn’t that people will get compensation, but that the industry will stop giving people cause to ask for it.