Thursday, June 07, 2007

Bad Behaviour part 3

Got my House insurance renewal quote through this week, now mine is set up so it just comes out of the bank, that way you don't really have to think about it......BAD MOVE. This time I did have a look at it at it had got up by £200, now I haven't made a claim, in fact I have owned my house for nearly 21 years and I have never claimed on my house insurance, so what could possibly justify a premium increase of such an amount, taking it to over £700?

I resolved to phone up 'Direct Line' (owned by RBS, profits last year £8.2bn a 16% increase) to find out, I was greeted by a very personable young lady, who on finding that I was proposing to no longer avail myself of said insurance immediately offered me £70 off the cost, while being polite to the young lady as it wasn't her fault that her employers are a bunch of unscrupulous conmen. I declined the opportunity to continue give them my business. Inside however I was absolutely seething, basically what had happened was that they were relying on my loyalty and slothfulness to shaft me good and proper! If they can give me £70 off they shouldn't bloody well have tried to charge me it in the first place.

I also object to being made to haggle, I am sorry but we hear a lot about peoples culture these days, well I find haggling is not part of my culture, if I ask what the price of something is, that's what I want to know, I don't what to find out what someone thinks they can get away with charging me, hoping I don't notice it is overpriced, I want to know what if costs so that I get what I want and they make a reasonable profit. Having to be made to haggle and having your loyalty kicked back in your face if you don't, is NOT English.

UPDATE Went to and got buildings and contents insurance for £210! that's over £500 less than direct Line wanted to charge, so it pays to shop around.

It reminded me of all the comments about ignorant, selfish, greedy people that have been a recent feature of this blog. It seems to me that if we are going to complain about chavs, thugs, some people with 4x4's, those playing music on the Bus and all those other aggravations, we should also have a look at how the selfishness inherent in the worst of capitalism helps to promote a society which is only out for itself and to hell with all the rest. A culture of anything I can get away with is all right so long as I don't get caught. Probably the financial services industry has to be the worst offender in this respect.

Some of these scams, you will be aware of others not, but these are just some of the things that I know about.

The great mortgage exit fee con, where they bumped up the fee for paying off your mortgage, in some cases by up to 6x's.
I Quote;
'Why have lenders increased MEAFs so much? I believe it's part of an increasing attempt to gemmy the competitive mortgage market. As many best buy tables work on the 'lowest interest rates', lenders have deliberately kept rates low, but increased fees to pay for it; so they look cheap, even when they're not. Yet it now turns out, with MEAFs anyway, this simply isn't allowed.

As well as MEAFs, the same's true with application fees among others, which a few years ago were typically £300, but are now often £600 - £1,000. For this reason you should be very careful when choosing a mortgage

The bank charges con ( not that this one ever caught me out as I was only once charged anything which was back in the 80's, I challenged it and got the money back, though not an admission that it was a con, that took another 20 years and the FSA), whereby those who got into financial difficulty, often through no fault of their own had misery heaped upon misery as each little infraction brought charge after charge down on their heads.

The endowment miss selling scandal which actually has more than one angle to it, the bit that is well known is that if you didn't realise that your return was not guaranteed then you could get compensation. What is less well known, and you can't get any redress for, is that in many endowments, some of of your profits had been promised to other people in the form of guarantees so if growth was less than expected then your profits get paid to others, I for one would never have taken out an endowment policy if I had been told that. In addition if you knew that the investment was in shares did you then know that the company can shift that money into something else, fundamentally changing the nature of the investment and lowering the potential for growth and there is nothing you can do about it, you can't even get your money out , because they impose exit penalties. They also often make this shift when shares are at their lowest point, even the most incompetent financial advisor knows you don't sell at the bottom of the market. You then flog the whole lot off to another company, which asset strips the funds and you wash your hands of the whole matter and change your brand name to 'more than' and hope the great British public don't realise that you are really Royal Sun Alliance (profits £780m), who shafted several million clients a few years earlier.

I could go on, Pensions, manipulation of interest rates to widen margins etc, etc.

I quote
'Finally, it's worth noting that mortgage lenders often use changes in the base rate to fatten their profits by improving their margins. For example, in 1989, when the base rate hit 15% a year, the typical SVR was around 15.4%. In other words, most lenders got by on the slimmest of lending margins: just 0.4% about the base rate. These days, mortgage lenders are milking loyal borrowers by charging SVRs around 2% above the base rate, the profits of which then help to fund attractive deals to new borrowers. So much for rewarding loyal customers!'

Thought I would finish by explaining a few banking terms:

Established banking practice = we have got away with this particular scam for years, so why the hell are you complaining now.

Self regulation = one bunch of cheats get together with others to learn better ways of conning people without getting found out.

Terms and conditions = All list of some of the ways we can shaft our customers and get away with it.

Balance transfer fees= a way of charging interest on 0% balance transfers.

I could go on, my personal list of con merchants I have come across, HBOS(profits £5.7bn, up 19%), RBS('RBS profit for 2007 'set to top £10.3bn'), Royal Sun Alliance, Abbey, and a few that are not banks BT (profits £2.5bn, up 15%), British Gas (owned by Centrica, profits £1.4bn), EDF, what do you think, am I being unfair?


At 9:29 am, Anonymous Anonymous said...

Hi Si,

I think you are probably right all round.

For views and tips on all things related to money, finances, investment, etc have a look at The Motley Fool:

Re. home and contents insurance, in December when we moved house, we got a good deal with Norwich Union, which offered much better rates than Sun Alliance and others. They even cover things like laptops which I had to have replaced recently and the claim process was easy-peasy. They didn't however cover our garden fences which blew away like paper in the January gales, but apparently few companies cover that.

It is amazing this situation of having to haggle or call up to complain and threaten to take your custom elsewhere in order to get any price reduction on services. Here's an example to be added to your list of scoundrels:
We are with Virgin Media (formerly NTL-hell)... which, yes, I know has problems in itself, but they are not Sky-Murdoch and free view doesn't work well in Plumstead. Anyway, our broadband cuts out for unexplained reasons, and our TV on-demand doesn't always work (what do you expect!?) So after several visits from engineers who said our set up was fine, and the problem would simply be that the networks go down sometimes (esp on the weekend when you have time to sign on to visit lovely blogs like this one!), frustrated, I rang up Virgin Media (as they are now known) one Sunday morning to say we had enough and we were cancelling our account.. and that we wanted a refund for all the time that we were paying for broadband but had no connection. After several rounds of being connected to yet another person, mostly in a foreign call centre, we spoke with a sensible Scottish day, who said they of course take such issues very seriously, and that they would refer the problem upwards, and. to keep us, would give us our broadband for £10/month, rather than £17.99. So, seduced, we said ok. Interestingly, the connection problems are not as bad as they were (it'll probabaly cut out now that I've just said that).

But it is still appalling that they can offer nearly 50% off just because we finally threatened to cancel our account. I wonder, what is the actual cost of this service and how much profit do they make. Presumably the are still making a profit off our £10 per month.

See you later at the Make Merry. We will be handing out Poo Bags to raise awareness amongst local dog owners about picking up after their furry friends.

Dr P x

At 10:16 am, Anonymous t said...

Wholeheartedly agree. Is it any wonder that kids growing up today turn out as chavs when they have bullshit and fuckeries like this to look forward to? I do my bit to 'stick it to the man' every opportunity I get, but the man is EVERYWHERE.

We've got a giant interwoven oppression of corporates, banks, religion, media and government. All in it together for what they can get out of us. The only shred of comfort is that history shows that eventually oppression of people ALWAYS fails.

At 8:43 pm, Blogger Hugh said...

Hi Simon - apologies for not having contacted you for a few days; things have been a bit on the busy side all round.

I heartily agree about the state of the UK Financial Services industry (some years ago I worked in an associated business, and when I realised how things ran, I got out pronto).

I wanted to get to the Plumstead festival, but I have had one of those days when things take ten times longer to do than you expect, and I did not make it. I had hoped to bump into you in person. Never mind.


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