What great news this morning for anyone, such as myself, who has been following the PPI scandal closely, to hear on the radio that Lloyds Bank have taken the unprecedented step in cutting £2 million pounds from the bonuses of 13 executives, including their former Chief Executive. There will no doubt have been cheers at breakfast tables the length and breadth of the country.
A British bank has never attempted this before, but it can be safely assumed that this will just be the start, the other large banks such as RBS and HSBC will inevitably be forced to follow as the same situation exists in their institutions. Lloyds stated that the bonuses in 2010 were in fact based on bonus pots which were inaccurate as a result of the mis-selling of PPI and the amounts that need to be set aside to make reparation to borrowers. Lloyds Bank alone in fact has had to make a staggering £3.2 billion available for compensation.
Up until now the major banks and the other financial companies who were involved in selling PPI have appeared to hold all the trump cards against Joe Public, who has been grievously wronged. There was very strong resistance to any compensation being paid out at all until a chink of light appeared in the end of the tunnel in June 2011. The financial industry had been vociferously defending their rights and refusing to acknowledge culpability, when they lost a decision in the High Court. A Judicial Review stated that the financial institutions should drag their heels no longer and should compensate all borrowers, large and small, who had been mis-sold PPI.
Still Goliath was reluctant and the Financial Ombudsman has been inundated with complaints by individuals who are experiencing horrendous problems trying to reclaim money that is rightfully theirs. There have been several rulings from the Ombudsman, all favouring the little man, David. It is going to take time, in fact the FOS (Financial Ombudsman Service) and the banks have all needed to employ extra staff to deal with this situation.
As for today’s news, it is a case of justice being seen to be done. So well done David, Goliath, although not completely down on his knees is hopefully well and truly on his way there.