The Great PPI Robbery Redux

I must be missing something. UK banks are all reporting their profits and losses with separate adjustments that 'strip out' their massive provisions for mis-selling payment protection insurance in connection with their retail credit products over many years.

In other words, they suggest they would have been 'much more profitable' if they had not ripped off consumers.

But they did rip off consumers, and this damaged their profitabilty.

Worse still, their provisions do not reflect the fact that they used PPI revenue to cross-subsidise the marketing and sale of related credit products. So there was a false market in those products as well.

The point remains: will these banks continue to rip off consumers? Will there be more fines and more provisions?

Millions upon millions of fines and adverse findings in UK banks' recent history suggest we have not seen the last of their exploitative conduct.

And it would seem very unlikely that in the current economic environment these businesses will be capable of dedicating the necessary resources to ensure their processes and procedures are compliant.

We urgently need to figure out alternative sources of finance to our banks.

More Tea, Wolfgang?

The "Tea Party" may be getting it in the neck for its bumbling brand of brinkmanship over the US debt ceiling, but, as Schumpeter points out, it's the European finance leaders who seem not to realise the gravity of the current financial situation:

"Italy sold €8 billion ($11.4 billion) of ten-year bonds on July 28th but had to pay a yield of 5.77% to do so, the highest level at auction for 11 years. Making matters worse, European politicans have gone back to making unsettling comments after their brief show of discipline at the summit: Wolfgang Schäuble, Germany’s finance minister, said this week that he would not be writing any blank cheques to the euro area’s bail-out fund, the size of which is inadequate to ringfence Spain and Italy."

High Street 2.0: The Mutual Village Shop

Now this is more like it. When the Sarratt Village Shop was put up for sale, the community campaigned to raise enough money to buy it from local family who owned it, "so that it can be run and developed over the long term for the benefit of the wider community." Eighty five households invested in a community interest company - along with the existing owners, who were persuaded to stay on as managers.

David Alexander, who led the campaign, first wrote to the community in February 2010, suggesting they needed to raise £183,000 - an average of £116 for each person in the village. The deal completed on 4 July 2011. Additional working capital will mean a new stock management system and the chance to develop a broader post office offering. There are further opportunities for investment, ideas and other involvement. And clearly it's in the interests of everyone in the village that the shop is supported.

As David's note explained, there are over 150 such shops in the UK. Surely such community initiatives must be high on the list for Mary Queen of Shops?

Looks like a nice spot. I might drop in.

Fair Energy?

What is it about the UK's institutions that makes them think it's okay to drag consumer champions through the courts?

The banks have been tireless in their battles with consumers and regulators across numerous products.

Now Scottish and Southern Energy is appealing its losses on doorstep mis-selling cases brought by Surrey County Council's Trading Standards unit, while MoneySavingExpert reports:

"Some 73% of Scottish Power's pre-payment customers in 2010 came from the doorstep while SSE, which has just announced price increases of 18% for gas and 11% for electricity, says 45% of the new customers gained in the UK came from door-step selling."

As Mike O'Connor, chief executive of Consumer Focus, says:

"Organised confusion, pressured selling, misleading information - no market should be able to operate like that, and especially not one that provides an essential product that is getting more and more expensive."

Today, MPs reported that "four of the Big Six [consumer energy suppliers] were under investigation by Ofgem for mis-selling" and that:

"On 7 July SSE announced that it was suspending all door-step sales activity with immediate effect. Its press notice stated that it had taken this action for four reasons:

1. There was low confidence in the way companies sold energy on the doorstep, and the way in which salespeople were remunerated;
2. Energy was a significant purchase, and the sales process rightly required increasingly significant customer safeguards;
3. Customers have a growing need for objective information and help to enable them to use efficiently the energy they buy, especially in an environment of rising unit prices; and
4. The energy supply market was evolving from the simple retailing of electricity and gas to providing a bigger range of smarter energy products and services, and engagement with customers needed to reflect this."

So why are they appealing the Surrey mis-selling findings?

Because our energy providers are not in the business of solving their customers' problems, but their own. They are institutions, not facilitators. Which, as they may be starting to gather by now, exposes them to the downside, not the upside, of social media.

CDSs on Financial Crime?

Insurers emboldened by the bail-out of AIG and a rock-solid culture of greed and stupidity, Schumpeter warns us, are boldly venturing into the directors and officers insurance marketplace with a great little product that will cover “damages established by FDIC due to non-intentional wrongful acts or omissions by the executive or director.”

I love these guys.

Love them!

Talk about the "The Big Short". These guys are short of just about everything.

I mean, how is this a good idea for anyone but criminals and the criminally insane?

WHERE ARE THE REGULATORS???!!!

Well, Schumpeter tells us, "The FDIC, and three financial-industry lobby groups we also approached, declined to comment."

F*cking asleep.

I despair. Really, I do.

Might even rush out and buy a KickOut Bond.

Or Greek debt.

Finish up on a park bench under old PPI policies outside the FSA.