Tuesday, January 15, 2013

The PPI Mis-Selling Scandal

Without wishing to seem even more contrarian than usual, I'm a little bit sceptical of the whole brouhaha surrounding the mis-selling of Payment Protection Insurance. 

PPI was industrially mis-sold, for sure, and there must therefore be some accounting for that; yet it seems to have been mis-sold in the context of 'victims' having been mis-sold it as a consequence of having sought credit facilities, for example loans or credit cards. If they hadn't sought some sort of credit, they wouldn't have been exposed, or indeed have exposed themselves, to the risk of it being mis-sold to them. 

While the behaviour of British banks in behaving the way they did was predictably despicable, getting their PPI money back seems to me to be something of a 'win-win' for some of the people who were mis-sold it. Not only did they obtain the credit facilities they sought, and presumably enjoyed whatever benefits they had sought to gain from that credit, but they may also have covered at least part of its cost from their PPI compensation. 

There will be some, perhaps many, people who got the raw end of the deal from PPI when they tried to claim it, I'm sure; but there will be others whose only losses from having been mis-sold PPI are strictly notional, and whose compensation means that they might have done quite nicely out of it. 

This is troubling, because it might then run the risk of being regarded as being a reward for what, for some, might have been mere common improvidence.

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