Provident Financial – Another Payment Protection Insurance Scandal?
After the great PPI scandal, the last thing one would expect is for a UK bank to be subject to an FCA investigation on providing payment protection “insurance”.
But, this appears to be what has happened to Vanquis Bank’s Repayment Option Plan on its credit cards.
They were selling expensive “insurance” to their subprime borrowers which would freeze the balance for 2 years in certain circumstances.
Interest would continue to be added, apparently earning the Provy a tidy £70 million per year in extra fees, plus compounding interest. Was money which should have gone to pay off the customer debt used to pay the premiums?
Rates were £1.29 per £100 of the outstanding balance per month for the protection or £1.19 per £100 per month if you are unemployed, retired or a student.
Vanquis Bank stopped offering the ROP to new customers in April 2016, but the half a million or so customers who signed up can still use it.
The “insurance” appears to only offer what is required by the FCA’s own rules
Will be interesting to see what the investigation reveals.
“A firm must treat customers in default or in arrears difficulties with forbearance and due consideration.”