Supermarket
giant Tesco may be under scrutiny from the Serious Fraud Office for
overstating its profits. But its banking arm is seemingly in benevolent
mode, busy handing out cash like confetti at a wedding and in the
process depleting profits.
Last
week, a customer of Tesco Bank took time out from looking after her
newborn son, Sholto (unusual name but doing very well on all accounts),
to tell me that she had just received an unexpected gift from the
challenger bank – a cheque for ‘in excess of £100’. Very happy, she was.
Alas,
it transpires that the bank’s generosity has nothing to do with it
acknowledging Sholto’s recent birth (that’s a shame because I really
would like to praise a bank one of these days). But it does have
everything to do with its serial breaching of the 1974 Consumer Credit
Act.
Refunds: Tesco Bank is beginning to
pay compensation for failing to send out personal loan and credit card
statements on time to customers
Sholto’s
mother, it turns out, is one of the first Tesco Bank customers to get
compensation for the bank’s failure to send out personal loan and credit
card statements on time.
Under
the Act, failure to provide prompt ‘post-contractual’ information is
viewed as a statutory breach. An offending bank or building society is
then obliged to refund any interest or charges that were incurred in the
period between when the information should have been sent and when it
actually went out.
In the
case of Sholto’s mother, her cheque was for the return of interest she
paid on her loan between late August 2011 (when her statement was due)
and mid-December 2011 (when it finally dropped through her letterbox).
It’s a shame the bank’s generosity has nothing to do with the birth of Sholto
In
total, 175,000 Tesco Bank customers are in line for refunds of £43
million. ‘The redress programme has commenced,’ a Tesco Bank spokesman
told me last week (I knew that already, thank you, Mr Spokesman). ‘We
are writing to all those affected. Customers do not need to take any
action.’
Other
banks and building societies are in the process of making similar
refunds. In March, the Office of Fair Trading (now no more) confirmed
that just short of 500,000 customers would be receiving £149 million
from 17 unnamed financial institutions as a result of Consumer Credit
Act violations.
With
Tesco Bank having declared its hand – and assuming my maths is correct –
that leaves 16 banks and building societies due to send out refund
cheques totalling £106 million to 325,000 customers. It would be nice to
think all outstanding refunds, averaging about £300, will be sent out
ahead of the enormous expense that is Christmas.
As Tesco likes to say when it’s not busy overstating profits, every little helps.
I
don't often have much nice to say about insurance companies, either,
but occasionally someone from within its ranks talks a little sense. In
recent years, comments from two eminent industry figures have stuck in
my mind.
The first were made by Tim Breedon, at the time chief executive of Legal & General.
Over
lunch and before a drop of Sauvignon Blanc was consumed, he revealed
that he encouraged L&G’s claims department to rejoice in unison
every time it paid a claim. ‘After all, it’s what we’re in business
for,’ he said.
Given that I had always assumed insurers did their damnedest to decline claims, his comments bordered on the revelatory.
'Revelatory comments': Tim Breedon, former chief executive of Legal & General
The
second comments were made recently by Nigel Wilson, who stepped into
Breedon’s chief executive shoes at L&G in 2012. I will leave you to
ponder whether it is a coincidence that both of these ‘common-sense’
individuals worked for an insurer that has had the gumption to head for
the exit doors of the inward-looking, self-serving and rude Association
of British Insurers.
Last
week, Wilson described Labour’s proposed mansion tax on homes worth
more than £2 million as ‘anti-London’, ‘unjust’, ‘poor economics’ and
‘pandering to the politics of envy’.
He
added: ‘People who choose to prioritise the buying of a home have
typically made sacrifices to do so: fewer foreign holidays, meals out or
other luxuries. Through no fault of their own, their prudence would be
punished by a mansion tax.’
As
someone who does not own a £2 million home (and never will unless my
EuroMillions numbers come up), I have no vested interest in railing
against a tax that could hit homeowners with an annual charge of at
least £3,000.
But
rail against it I will. Irrespective of any fine tuning that Labour
does to the tax’s mechanics between now and the General Election, it
won’t change the fact that it is a bad tax designed by those who relish
punishing the prudent and the successful. Shame on Labour.
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