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From This is Money and the BBC:

Whistleblower: 'RBS trains staff to lie'
Royal Bank of Scotland stands accused of training its staff to mislead customers to prevent them from cancelling their Payment Protection Insurance (PPI) policies on credit cards.

The allegations come from a whistleblower within the bank's 'customer loyalty team', who recently detailed claims of the abuse to the City watchdog, the Financial Services Authority.


The whistleblower claims that staff stall calls by passing them on to the person next to them in an attempt to thwart cancellation of the policies.
The customer is reportedly later offered a 'goodwill gesture' to convince them not to cancel their policy.

The sale of PPI along with loans and credit cards was lambasted by the UK Competition Commission earlier this year.

The insurance is sometimes added on to loans and credit cards without the customer's consent and adds significantly to the cost of borrowing, it said in an official report.

The memo, seen by This is Money, alleges RBS trains its advisers to tell customers seeking to cancel PPI on their credit cards that they were being transferred to another department. Often the adviser is actually transferring them to the colleague sitting next to them.

The customer is then allegedly kept on hold for five minutes in the hope that they will hang up. If they do not, it is claimed they are then told that they cannot cancel the PPI without also cancelling the credit card and paying off their debt in full.

As a 'goodwill offer', advisers are then instructed to persuade clients into accepting a two-month 'free trial' of the insurance policy to placate them; however the free trial was in effect only for one month as the policy had until recently a 30-day cancellation period.

For going through these motions and preventing a customer from cancelling their PPI, advisers are allegedly paid £5 in tax-free shopping vouchers. Then could earn up to £500 worth of these per month.

This compares with £1 for retaining a customer looking to cancel a current or savings account.

The source, who does not wish to be named, said that they raised a moral objection with senior members of staff, but requests to have the procedure revised were apparently ignored. He said: 'I believe the whole process is dishonest and unethical and I refused to take part in it.'

His comments are backed up by two other members of the Customer Loyalty team, who were contacted by This is Money.

The FSA declined to comment, but said it takes all allegations against regulated companies seriously.
RBS said the matter is 'the subject of an ongoing investigation'.

http://www.thisismoney.co.uk/saving-...9&in_page_id=7

PPI sales face new restrictions

By Ian Pollock
Personal finance reporter, BBC News

The Financial Ombudsman Service (fos) has called on regulators to take more action to stop the mis-selling of Payment Protection Insurance (PPI).

This year the FOS has been deluged with complaints about mis-sold PPI policies, and is upholding the majority of them.

A spokesman said the FOS had "very severe concerns" that complainants were being fobbed off by banks and insurers.

The Financial Services Authority will consider the FOS's request at its board meeting later this month.

"PPI complaints have risen 10-fold in the past two years, and are now about 25% of all the complaints we get," said an FOS spokesman.

Huge rise

The ombudsman is currently receiving more than 500 complaints a week about PPI policies, which are typically sold by banks when they make a loan to a customer.

The insurance is supposed to cover someone in the event that they fall ill or lose their job and cannot repay a loan, credit card bill, or mortgage.

But consumer organisations have criticised the insurance as useless and little more than a profitable protection racket for the banking industry.

Earlier the consumers organisation Which? reported that 1.3 million people had bought PPI when taking out a credit card, under the mistaken belief that it was compulsory or would improve their chances of having their application approved.

But a spokesman for the British Bankers' Association (BBA) has said action by the FSA is unnecessary.

"The financial services industry agrees that it is in the interests of customers to deal quickly and consistently with genuine complaints," he said.

"But we do not agree that a regulatory response is needed to achieve this.

"Presently, the industry is actively working to determine the best way to handle PPI complaints across all providers consistently and efficiently," he added.

Consumer detriment

The Ombudsman has written to the FSA saying it believes the complaints are now so widespread that it has spotted a "trend to consumer detriment", which has "wider implications."

The spokesman said the FOS was particularly worried that banks and other organisations in the financial services industry were failing to deal with initial PPI complaints properly.

"We are particularly concerned that firms should have a very good idea of how we deal with unresolved complaints but they are still coming through," he said.

"The complaints are so similar to those we have already settled in consumers' favour that we are worried that firms are not learning the lessons from this and are not treating customers fairly," he added.

Citizens Advice, which first lodged a formal "super complaint" about PPI three years ago, said it was not surprised by the experience of the FOS.

"We are still seeing cases where PPI is sold improperly, despite the FSA's new rules on PPI sales," said Sue Edwards of Citizens Advice.

"Many of these cases involve High Street banks and credit card companies," she said.

The FOS has already had extensive discussions with the banking industry, but is worried that organisations that sell PPI are "not getting the message."

One bank, RBS/Natwest, has responded to the FOS's approach to the FSA by changing its attitude to dealing with customer complaints about PPI.

According to an internal bank memo, dated 22 August, the bank decided "at Group Senior Executive level to reduce the volume of complaints going to FOS" to demonstrate to the FSA and FOS that their concerns have been taken on board.

Tighter rules

The ombudsman has not asked for specific measures to be taken by the FSA.

But its call is likely to prompt further action by the regulator, which has already been undertaking a long investigation into the way PPI is sold.

The FSA has already fined or censured 18 firms or individuals for mis-selling the insurance.

Its investigation, which is now in its third phase, will come to fruition in the next few months and may lead to further restrictions on the way PPI is sold.

"We are highly aware of the issues in the PPI market," said an FSA spokesman.

Doug Taylor of Which? encouraged the FSA to take action.

"There clearly is a big problem with PPI, and the FSA should use its rules to stamp out bad practice," he said.

Earlier this year the regulator introduced tougher rules on how PPI could be sold.

And in June the Competition Commission concluded that banks and insurers were overcharging their PPI customers by £1.4bn a year.

It blamed at lack of competition at the point of sale when people took out a loan, and suggested that selling PPI at the same time as approving a loan might be banned.

The commission will make its final recommendations in November or December.

BBC NEWS | Business | PPI sales face new restrictions