Pressured Selling of ID Theft Protection Insurance

November 15th, 2010

After the protracted struggles against PPI and unfair bank charges, a new theatre has opened in the battle for fair banking practices. Bank customers have started to complain they are being signed up for ID theft protection insurance that they do not want.

Customers of major UK banks including Santander, Barclaycard and NatWest/RBS report the problem occurs when they phone to activate a new credit or debit card. They are put through to the firm Card Protection Plan (CPP) which tries to sell them insurance at the same time.

Unsurprisingly, CPP admits some ‘mistakes’ have been made but insists bank customers are not pressured into buying its products.

Customers are reporting that when they call to activate their credit cards they are not connected to the card supplier but CPP, which is sub-contracted to activate many UK credit cards, especially supermarket cards.

Once the CPP staff members activate the cards they then pitch the identity theft protection insurance. The complaints raised so far indicated that even when declining the insurance, customers later notice premiums being deducted from their accounts.

This insurance doesn’t come cheap. When one customer checked his statement recently he discovered he had been billed for £83.99 for the product. When he looked at his statement for the year before more carefully, he realised he had been charged £69.99 then as well, putting him more than £150 out of pocket for a service he did not want.

The credit card companies involved direct irate customers to contact CPP directly. In the most worrying aspect of the whole business CPP then ‘listens to the recordings of the original call’ to judge if the customer asked for the insurance or not. If the customer asks to hear the recordings as well they have been lost.

Asda, Barclays, Barclaycard, NatWest/RBS and Yorkshire Bank all have such contracts with CPP.

Analysts looking into the case for a preliminary report heard from a Santander and a NatWest customer who said they too were signed up for ID theft protection insurance from CPP when they clearly said they did not want it.

One customer reportedly said, “They just were relentless. I’d already said no several times. I could imagine people caving in.” Asda has since claimed to have instructed the firm to stop pitching identity theft protection insurance to its customers.

Unsurprisingly, CPP has confirmed to investigators that the banks get a cut from every policy sold.

There are some heartening aspects of this story. Following the previous mis-selling scandals to have hit the credit industry the regulators and even the banks have been quick to react to this. CPP has been forced onto the back foot, although it remains to be seen if this will have long term effect.

Customers should be aware of their rights and never, ever give in to pressured selling techniques.

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The British taboo over debt eases

November 4th, 2010

A survey released this week about the attitudes of people in the UK to debt has thrown an interesting new light onto what was once a British taboo. This has both positive and negative indicators for our collective financial health.

One third of Britons are no longer embarrassed to discuss their debt. This continues a pattern which first saw shame lifted from debt itself, although it was rarely talked about, and is now progressing to people being more open and honest about their personal finances.

For most British people of previous generations credit was a dirty word and they would never consider buying something unless they had the money to pay for it. If they wanted a ‘large ticket item’ they would simply save up and then buy it.

In addition to debt, British people are now more willing to talk about how much they earn. While this is not a topic discussed very often with strangers, close friends and family will now know the size of each other’s wage packet where in the past this was considered an uncouth subject for discussion.

This change in attitudes is very complex and has involved sociological and cultural factors as well as economic ones. The move away from an idea of credit as morally wrong is in general a good thing.

Interestingly, despite being happy to talk about debt and other personal finance affairs Britons would still be reluctant to discuss a visit to a pawnbroker. Almost fifty percent would refuse to tell anyone and only twenty percent would tell their friends.

On the other hand, almost all Britons say that shopping in ‘budget’ shops is acceptable and that they wouldn’t be ashamed to buy second hand goods as getting the best price possible is more important than saving face.

However, the survey had some much more worrying findings, chief among them being that 18% of the British people feel there is no shame in bankruptcy. The issue is undoubtedly complicated and some people will simply be unlucky. But for many, bankruptcy is the end of a long road of financial mismanagement and the instrument is today rarely used except in extreme cases.

Due to the continuing problems caused by the recent recession, almost 35,000 people were declared insolvent during the three months to the end of June and experts suggest many more are to come as public spending cuts come into effect.

The results of this survey are incredibly interesting for gaining an understanding of the British attitudes to various aspects of personal finance, but most especially debt. That we are more willing to talk about debt shows a growing maturity and willingness to confront and solve problems rather than allowing them to build up to unmanageable proportions.

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