Confessions from the City: The PPI insider
In the summer of 2006, I was asked by a well-known high street bank to set up a new division to monitor risk and compliance in its retail arm. I was given 25 people, most of them refugees from departments that had been wound up. Joining me was an alternative to redundancy and enthusiasm was in short supply.
With a heavy heart, I called them to one of the bank’s more dreary administration centres. I had rehearsed my speech and, believe me, Shakespeare’s Henry V presented a less compelling argument for commitment to the cause than I did that day.
I talked about my experiences in other banks (I’d worked for two of this one’s closest competitors) and emphasised the opportunity to show their mettle “for there is none of you so mean and base, that hath not noble lustre in your eyes”. (Okay, maybe not those exact words.)
It worked. Sinews visibly stiffened, blood was summoned and teeth were set.
People began to share their experiences of just how badly run the bank was. Evidence was presented of risks that senior management were ignorant of (or turned a blind eye to).
My team visited branches and discovered selling practices that were bordering on fraudulent. They identified major system flaws at head office. They talked to customers and gained shocking insights into how the bank treated (or mistreated) them.
The two most obvious risks were the way branches sold loans, and how they sold PPI to support those loans. Or in reality, the other way around: the bank sold loans, at interest rates which could not possibly be profitable, to support the sale of PPI. Their targets and rewards for selling PPI were enormous; it had become the entire retail division’s profit stream, its raison d’être.
We drew management’s attention to these concerns, in pithy, well-evidenced reports. Our energy and effectiveness were exactly what the bank did not want. Our reports soon disappeared into political quicksands Sir Humphrey Appleby would be proud of. The vitriol we received was breathtaking, and my boss tried to force me to bury my team’s findings.
I got into hot water for discussing our lending and PPI reports over what I naïvely thought was an informal lunch (with exquisite wine from the bank’s superbly stocked cellars) with my boss’s boss, a former senior regulator.
As my team’s enthusiasm rose, mine plumbed fresh depths and I left before the fallout began. My department was disbanded. My boss was promoted to a bigger role, and her boss is still a big cheese in the City.
Every time my old employer adds another billion or two to its PPI redress bill, I just smile. Bitterly.
