The scandal of the mis-selling of Personal Protection Insurance is well known as one of the worst financial scandals in history.
Some 12 million people have received £22.5 billion in compensation from unnecessary Payment Protection Insurance (PPI) schemes sold to gullible people.
And to compound it a National Audit Office report (NAO) last week highlighted how cold calling claims management companies had ripped off £3.8 billion and £5 billion of the compensation paid for work which could be done by claimants for free.
What might also shock people – particularly in the current debate over whether we should quit the European Union – is the revelation by the NAO that it could not complete the investigation to its satisfaction because a European Union directive banned Parliament from getting confidential information. I have written about this in this week’s Tribune magazine.
The situation is this. As well as finding out the scale of the problem the NAO wanted to know -on behalf of you the taxpayer – whether the public watchdog the Financial Conduct Authority had done its job its ensuring the many banks and financial organisation had smartened up their acts to prevent a repetition. Particularly as they are fears that there could be a new scandal involving the mis-selling of annuities and pension schemes.
The FCA had collected this information but refused to hand it over to Parliament’s watchdog. The reason it turned out is that the Financial Services and Markets Act 2000 combined with EU law restrictions prevents them obtaining the information from the FCA.
As the NAO said: “ This limits our ability to reach a judgement on the FCA’s value for money, as we could not carry out a full assessment of the effectiveness of the FCA’s actions…. we have only limited evidence on how the FCA’s actions have changed firm behaviour, and how effective its redress schemes have been in providing compensation to consumers.”
The NAO tried to get around this by contacting some 20 banks and financial companies and asking them to volunteer to disclose the information. Fifteen did reply but five including two of the companies with the largest number of complaints, Barclays and British Gas Services, declined to provide any information.
The 15 who did reply included HSBC Bank plc; Lloyds Banking Group; MBNA Limited; Nationwide Building Society; NFU Mutual Insurance Society and Santander UK plc.
But a NAO spokesman said: “The information we got from the others while helpful, didn’t enable us to carry out a full assessment of the effectiveness of the FCA’s actions.”
What is the EU doing putting the interests of banks above people and Parliament?The NAO is now asking the Treasury to pass a law allowing it some access to this information but it will have to bow to EU law on how much can be revealed.
I am not a supporter of Brexit but it seems to me there is something very wrong here that needs changing. I am surprised that the vociferous campaigners for a No vote have not latched on to this – even if it is in the small print of the report. The NAO is obviously an independent source with no axe to grind over Europe. But it has provided campaigners who say we are not in control of our country with a very potent example on a very serious issue.