Bank complaints up, Government’s patience wanes

Business banking news review: week ending 4 Oct 2012

The FSA says complaints for Barclays and Lloyds TSB are out of control this week, while the Government indicates its patience with the industry draws to an end.

After a six month complaint review, the Financial Services Authority has revealed that the two banks with the highest number of complaint – a dubious honour indeed – are Barclays and Lloyds TSB, driven primarily by the scandal surrounding mis-sold Payment Protection Insurance. In fact, the FSA estimated that it can’t go more than seven seconds without another PPI complaint coming in, with a total six month figure of 2.2 million PPI complaints – an increase of an eye watering 129 per cent!

It’s easily the largest financial scandal of all time, according to Peter Vicary-Smith, chief executive for Which?, the consumer group. Which? estimates that the £10 billion fund banks have set aside to settle PPI mis-selling claims could be exhausted well before 2013.

The scandal has been so far reaching that the Financial Services Consumer Panel has called for banking provider to be subject to a professional body in order to deter against the sorts of behaviour that led to the calamity in the first place. Working Group Chair for the Consumer Panel, Mike Dailly, urged bank executives to be held to the same high professional standards as solicitors and doctors.

The Government has finally had enough as well, if the words of Yvette Cooper, the shadow home secretary are to believed. Cooper said that the next Labour government is committed to introducing an Economic Crime Act – the first of its kind – in order to fight back against money laundering, fraud, and other financial crime grey areas, and would make instances such as the Libor scandal a criminal offence.

Legislation for financial crime is an absolute requirement, the shadow home secretary said, in order to provide law enforcement personnel with the clarity needed to investigate and apprehend the perpetrators of such underhanded activity. Much like the PPI mis-selling scandal, the Libor scandal has also been a high-profile one, involving the manipulation of the London Interbank Offered Rate in Britain by traders hell-bent on artificially giving the appearance of lowered risk levels, despite evidence to the contrary.

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