Manufacturers of financial products are not alone in trying to shrug off the blame when their products are badly used.Â Glue makers resist taking the rap for sniffing.Â Motorcycle manufacturersÂ assert thatÂ their machines are perfectly safe when ridden sensibly.Â Gunmakers say it’s people who cause shootings, not guns.
But sometimes, I must say, the self-justification of financial product providers is particularly hard to take.Â At a conference recently, I saw a presentationÂ from one of the largest manufacturers of Payment Protection Insurance (PPI).Â This disgraceful product is, basically, the way that providers of personal loans have made big profits over the last ten years:Â the loans themselves make a bit of money, but extortionate premiums for rubbish PPI cover that’s more than likely not to do what the borrower expects are the way they really cash in.
Basically, the thrust of the presentation was that PPI is in fact a good and useful product which has been ruined by greedy, cynical and incompetent distributors.Â According to the speaker, these distributors – mostly banks making personal loans – have charged far, far too much for it, and provided useless and completely inaccurate advice about it partly by accident, because their staff are untrained and incompetent, and partly on purpose, because if people understood how rubbish the product was they wouldn’t buy it.
The speaker expressed the hope that maybe, under pressure from a huge range of bodies from the FSA through to large numbers of MPs, the OFT, Citizens Advice and the Consumers’ Association, these wicked distributors may see the error of their ways, reform and usher in a new golden ageÂ in which PPI isÂ fairly priced and properly sold.
I think I can honestly say that this was the most astonishing, infuriating and despair-inducing presentation I have ever heard.Â Â
Of course there are dodgy fifth-rate manufacturers of crap products who join with fifth-rate crap retailers to conspire against the public in every industry – take, for example, those Chinese baby milk companies who’ve apparently been cutting their product with melamine, which turns out to be not, as I thought, a kind of plastic which you use to make picnic crockery, but a very nasty poison.Â But this presentation was from a division of a leading global financial services company, which has been distributing its PPI through many, if not most, of our High Street financial institutions.Â And while nothing that theÂ latterÂ do to shaft their customers surprises me any more, I’m still naive and idealistic enough to be astounded by the see-no-evil attitude of the manufacturer.
I’m not even going to bother to make a point about the ethics of turning a blind eye to the uses that people find forÂ your product – no melodramatic analogies with land-mine and cluster-bomb makersÂ here.Â I just wantÂ to make a point about brands.
Among the major players in every other sector of the global economy, where else could you possibly find a manufacturer who cares so little – in fact, who cares not at all – about the effect on its brand when its products are hideously badly retailed?Â If Coca-Cola found thatÂ its eponymousÂ product was being sold forÂ Â£20 a can as a miracle plant fertiliser, don’t you think they mightÂ expressÂ a hint ofÂ dissatisfaction toÂ the retailer?Â If Mercedes-Benz found that their smallest car was being sold for Â£100,000 as a heavy lorry, do you think they mightÂ review their supplyÂ arrangements withÂ the distributor in question?Â If iPods were beingÂ falsely sold as microwave ovens, do you think Apple might choose to intervene?
These organisations care about their brands, and they realise that bad retailing is one of the greatest risks to their brands that they have to manage.Â This PPI manufacturer – although a global corporation of not dissimilar size and scale – couldn’t be more dissimilar in its attitude towards its brand.Â It knew perfectly well that its product was being overpriced by several hundred per cent and mis-sold andÂ misdescribed to customersÂ – and it happily carried on providing its distributors with the product until the authorities effectively banned its further sale.Â Â
I know that one of the things the FSA most wants to do is to find a way of preventing manufacturers of financial products from being able to wash their hands of abuses perpertrated by their distributors.Â Â I do hope they find a really good way.Â Really soon.