Will Biba be able to gather the evidence of malpractice?
Make no mistake, the investigation of banks by Biba is a very serious issue. But gathering concrete evidence will not be easy.
There may one or two examples of customers feeling the pressure from banks, but would that be enough?
And even if enough evidence is gathered to submit to the FSA, would that then convince the FSA to take punitive action against the relevant banks for breaching their own banking code?
Perhaps Biba’s best bet is to put the frighteners on the banks, so that if they are strong-arming customers, they will eventually stop it.
From the banks point of view, they will be very keen to prevent anything that tarnishes their reputation.
They have been battered by a relentless stream of bad news and criticism – ranging from excessive bonuses to careless risk taking - since September last year, and are desperate to stop the rot.
Already the Insurance Times understands one bank has told those brokers making the allegations to put up or shut up.
That makes Biba’s job even more difficult. The organisation has to be very careful how it treads.
As a result, Biba has not gone into specifics about what the banks are meant to be doing wrong.
However, reading in between the lines, it probably revolves around banks insisting some customers use their insurance products if they want full access to lending facilities.
But as one broker said, if the banks are indulging in this activity, they will come under suspicision with the amount of customers they are pulling in for their insurance products.
It’s all a bit opaque at the moment, but hopefully more will be understood in the coming months.
