What price insurance protection?
THE GUARDIAN - 6TH MARCH 2004
It may seem odd to get hot under the collar about something as arcane a payment protection insurance but it is a financial product purchased by perhaps 15 million people in Britain, and today, in our Jobs & Money section, we publish hard evidence showing that many of those purchasers are being ripped off.
It’s a simple enough matter: any business textbook will explain that for a company to enjoy a profit margin of 70% on a product it must either be offering something unique – such as a patented medicine – or the company must be operating in some sort of monopolistic environment.
Payment protection insurance does not obviously fall into either category. As a generic product it is as old as the hills, which in terms of supply there are literally scores of companies offering such insurance.
Instead, we have a situation where the big high street banks appear to be exploiting not only their raw market power but also the emotive hold they invariably enjoy over many of their customers.
The fact that when a person requests a quote for a bank loan he or she is routinely provided with a grossed-up figure, which includes high-prices and possibly useless insurance, is a disgrace. This would not be tolerated in any other industry, so why should the personal fiancé sector be any different.
The documents seen by the Guardian refer specifically to Barclays, but this is clearly an industry-wide issue.
Banking codes of practice have clearly failed here and there is an immediate need for action by the Office of Fair Trading.
Barclays’ chief executive, Matt Barrett declared last year that he didn’t know what the phrase ‘excessive profits’ at the time; it now looks plainly offensive.
