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From Times Online

April 19, 2009

Bailed out banks in mis-selling scandal

Northern Rock, RBS and Lloyds TSB are accused of using stalling tactics to deny
and delay payments to customers sold PPI

State-backed Northern Rock, Royal Bank of Scotland and Lloyds TSB are three of the worst banks at
turning down mis-selling claims, data shows.

The trio is using stalling tactics to deny and delay payments to people who believe they have been mis-
sold payment protection insurance (PPI), said claims-handling firm Brunel Franklin.

Its figures show they take twice as long to settle mis-selling claims as privately-owned banks. In most
cases, they pay out in six months, but customers of Northern Rock, RBS (and its NatWest subsidiary)
and Lloyds TSB generally have to wait a year or more.

PPI is designed to bail out those who lose their jobs or are unable to work due to illness or injury, but
has been criticised as being aggressively sold, expensive and virtually worthless due to a host of
exclusions.

Some bank sales staff sold policies to borrowers who would not be entitled to make a claim — such as
those with long-term illnesses, pensioners and the self-employed

Brunel Franklin has seen complaints about mis-sold policies surge 500% in the past six months. It
attributed the delays to the nationalised and Treasury-backed banks’ automatically rejecting claims or
passing them to the Financial Ombudsman Service (FOS) for “no apparent good reason other than
stalling the case for their own benefit”.
It said Lloyds TSB rejected the majority of claims. Northern Rock also initially rejected cases, but often
paid out once the FOS got involved. RBS generally offered a “goodwill gesture” of „750, often to people
who could be entitled to thousands of pounds.

Sally Bowyer at Brunel Franklin, said: “Some of the UK’s leading high-street banks now in public
ownership are short-changing consumers at a time when they’re feeling the financial pinch.”

Local authority worker Tom Fent, 54, from Doncaster, last week lodged a mis-selling claim against RBS.
He had a pre-existing medical condition when he took out the policy and, as a public-sector worker, has
good occupational benefits.
RBS has offered him „750, but Brunel Franklin believes he has a claim for „6,827.

“It’s disgusting really,” he said, “To think of the amount of money I’ve had to pay for something that I
wouldn’t be able to claim on and is totally worthless.”

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In contrast to other state-aided banks, HBOS — part of Lloyds Banking Group since its takeover earlier
this year — pays compensation in 65% of cases in six months, said Brunel Franklin. “We take our hats
off to HBOS,” said Bowyer. “If they can play fair, why can’t the other state-owned banks?”
Northern Rock said it considered cases individually and RBS said it would continue its practice of
investigating each complaint. Lloyds took complaints “very seriously”.

About 35m PPI policies are in existence, many of which are believed to have been mis-sold. The
average claim results in „2,500 compensation. The Competition Commission is banning PPI sales next
year.

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http://www.timesonline.co.uk/tol/money/consumer_affairs/article6121061.ece?print=... 18/04/2009