Consumer group, Which? is calling for banks to penalise executives who were at the helm during the height of the payment protection insurance mis selling scandal.
The calls come after Royal Bank of Scotland Chief Executive, Stephen Hester, bowed to public and political pressure and renounced his bonus and the bank’s former CEO, Fred Goodwin, was stripped of his knighthood.
Payment protection insurance was mis sold to millions of unsuspecting customers who took out a loan or credit card. Victims included the self employed who could not benefit from such a policy unless the business folds, those with a pre existing medical condition as such a policy will not cover these and vulnerable consumers whom were led to believe their credit agreement wouldn’t be accepted unless they took out PPI.
Yet despite duping customers out of billions of pounds – the extent of the scandal is set to cost lenders around £9bn – bank bigwigs could still be in line for top bonuses.
Which? Executive Director, Richard Lloyds, expresses his abhorrence:
“This is one of the clearest examples of unfair treatment of customers and reward for failure on an industrial scale.
“There has been a lot of rhetoric from the government and banks about linking performance to pay. This will be the test to see what that rhetoric means in practice.”¹
Several banks have confirmed that the cost of payment protection insurance redress will feature in this year’s pay talks. However those in charge at the height of PPI mis selling scandal have long since moved onto pastures new, bonuses and all, as Antony Jenkins former Chief Executive of Barclaycard who itself has earmarked £600m to cover PPI compensation claims , points out:
“The PPI problem dates back to the start of the last decade. The people who were leading the business at that time and who had accountability for this have left the organisation.”¹
Back in December, Lloyds were looking into reclaiming the £1.45m bonus of its former CEO, Eric Daniels, who left just weeks before the PPI scandal broke. However none, including Lloyds, have managed to reclaim bonuses paid out in the past as of yet.
¹Financial Times (Feb 2012)
