High street banks and building societies have seemingly accepted the torrent of criticism laid at their doorstep by the OFT.
At an industry meeting in London last week, the biggest players in the market, including the likes of Abbey, Alliance and Leicester, and representatives from the HBOS group, refused to make comment or defend their payment protection insurance practices despite the stinging criticism they took in the OFT’s report earlier this month.
Facing charges of poor competition in the market, excessive commission payments, inflated profits and derisory claims ratios, most of the high street banks and building societies chose to keep their own counsel rather than proffering a defence of their practices and procedures.
In assessing the work done by the OFT, questions were raised by trade bodies including the Financial Leasing Association, the Association of British Insurers and the British Bankers’ Association. However none of their comments truly addressed the issues in hand with any conviction.
Simon Burgess, managing director at Britishinsurance.com, commented: “It seems many of the players in this market realise their stance is indefensible and are waiting until they are forced to make changes rather than act voluntarily. I think they realise an overhaul of the market is just around the corner, but are quite happy to continue making as much profit as they can until this happens.
“Many of the bigger players seem to think they are beyond the reaches of the regulator. Certainly in light of the FSA’s Treating Customers Fairly initiative it would seem many of their practices are out of line and yet they continue to do nothing.”
The OFT is due to issue its full report later in the year and could still refer the market to the Competition Commission or make recommendations for change and possible sanctioning to the regulator.
