No shame, just profit

IT’S been another bumper year for the banks. But this year the tone of their chief executives has been of one of contrition.

After years of bad behaviour and mis-management of our money, the big bosses have finally accepted some blame.

They reined in their bonuses and, in some cases, even apologised for some of the worst mis- selling scandals in a generation.

One or two even told how they were making less money from their High Street business — that’s money made from you and me using current accounts, opening savings and taking loans—compared with the previous year. Only that’s not quite true. With the exception of Santander and Lloyds, every one of the big names made more cash from their day-to-day customers in 2011 than they did in 2010.

The only reason the business suffered was because of the vast amounts of compensation they have been forced to fork out for payment protection i nsurance policies, which should never have been sold in the first place.

Strip this out and it was a pretty good year — for them, that is, not us. This tells you how sorry they really are. The banks know the money they made from flogging payment protection insurance has gone. But when one door closes, another opens.

And it seems home, travel, pet and car insurance may be the way banks have found to prop up their bottom line.

The report on pages 38 to 43, and the terrible tale of Steven Duck on page 45, reinforce my concerns that, increasingly, many insurance claims are being rejected unfairly.

For the past year, Money Mail has warned readers about this crackdown on claims. So far the banks and insurers have done nothing to prove us wrong.

Figures from the independent Financial Ombudsman show the number of complaints about insurance have soared by 22 pc.

In their results, Lloyds Banking Group said payouts on claims had dropped 37 pc, while RBS paid out £1.2 billion less in 2011 than it did in 2010.

From the cases we have seen in the past year, genuine claims are going unpaid because of exclusions buried in the small print and technicalities.

These tiny details — which most customers will never spot — allow banks to refuse thousands of perfectly legitimate cases every year.

Part of the reason for tougher scrutiny from the banks is because fraud is growing. But we seem to have arrived at a point where they think we’re all liars and cheats — until we can prove otherwise.

The tale of Steven Duck is a perfect case in point.

The clause he fell victim to was one that stated the insurer was not liable for injuries received while the traveller was ‘under the influence of drugs not given by a doctor’. This is a particularly divisive wording as it precludes you from making a claim if you are drugged — as Mr Duck was.

You’d think being drugged was a relatively rare occurrence, but the Foreign and Commonwealth Office warns that cases where drugs are used on crime victims are increasingly common.

Direct Travel even made the insulting insinuation that Mr Duck took drugs himself. They presented no actual evidence to support this — even though he was examined by two doctors.

They simply came to t he conclusion based on the fact he was a student on holiday in Thailand.

Thanks goodness he had the wherewithal to take his case to the Financial Ombudsman.

Even then, Direct Travel shamefully fought until the last.

I suspect the Ombudsman will be dealing with increasing numbers of cases like this in coming months if firms are going to bolster their profits by kicking out honest insurance claims.

Lent penance

WE ARE in the middle of a new mortgage crackdown.

In the past week, some of the biggest High Street lenders have put in place new rules to make it tougher for some people to get loans — particularly if you are a first-time buyer.

I can understand the banks being nervous about the housing market and trying to take fewer risks than the past.

But some of the rules are simply preposterous.

Santander, for example, wants homebuyers to detail their spending on events such as Christmas, birthdays and holidays.

Yet the City watchdog has ruled that this type of detail is totally unnecessary.

Even more ludicrous are the rules Lloyds Banking Group has put in place for buyers wanting an interest-only mortgage.

It asks them to detail what plan they have in place to pay off the capital part of their mortgage.

That’s all very sensible, in principle. Only the bank won’t allow you to include cash savings, only investments.

So, to be clear: Lloyds would prefer homebuyers to gamble the savings for their home on the stock market, where they could lose everything, instead of putting them in an account where their capital is protected.

This may be its idea of taking less risk — but it certainly isn’t mine.