And let's not stop at homeowners, the Government could pay PPI for those renting and in shared accommodation. Many will call this proposal farcical, but it will do more to inject some confidence in the economy than any £1bn bonus payment. It's a measure that impacts on many, rather than a few, and gives support to those who need it most at a time they need it most.
Braintree, Essex (PRWEB) February 10, 2009
News that the Royal Bank of Scotland Group plans to spend £1bn of taxpayers money on staff bonuses comes as no surprise and is another example of the arrogance of large financial institutions who are reckless with customers' cash, says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses.
Her outburst follows reports that the RBS will reward those behind the Group's financial failure, despite predictions that losses for 2008 will be around £8bn.
The Government holds a 68% share in RBS and Gordon Brown has already lambasted the firm, saying banks should consider waiving their rights to bonuses. Chancellor Alistair Darling concedes that whilst huge bonuses should be denied, payouts to staff cannot be ruled out. Instead the Treasury has ordered an investigation into UK bank management.
Sara-Ann believes a gentle warning and probes into bank leadership is not what consumers want: "This is a clear slap in the face for the British public who have witnessed £20bn of their taxes being used to prop up failing banks. Some banks are only operating because of government intervention and given the tax-paying public are now shareholders they should have some say in how their hard-earned cash is spent.
"£1bn is obviously surplus to requirements, otherwise RBS wouldn't be able to 'give it away' in profits. It could have been earmarked to help the millions suffering because of others' ineptitude, but instead it looks as if a fair proportion will go to the very people who caused this mess in the first place."
She continues: "How can the Government allow taxpayers money to be used as a reward for financial failure? The only help those unable to pay their mortgage have received is the option to extend their debt over an increased period of time - these people are not getting any cash payouts. What kind of message does this give? One of clear indifference to the feelings of constituents and something I hope will be remembered by voters when it comes to the next election."
Calls have been made for PPI to be paid for by lenders and included with the mortgage offer automatically. Sara-Ann suggests this move would be a far more effective use of 'spare cash' that some banks clearly have. She comments: "This would ensure mortgage payments are made, for up to year, should the homeowner lose their job and go someway to halting the downward spiral in the housing market.
"And let's not stop at homeowners, the Government could pay PPI for those renting and in shared accommodation. Many will call this proposal farcical, but it will do more to inject some confidence in the economy than any £1bn bonus payment. It's a measure that impacts on many, rather than a few, and gives support to those who need it most at a time they need it most."
PPI pays a pre-determined sum every month covering a variety of financial commitments such as loans, credit card or wider household bills, if redundancy, accident or sickness occurs. Payments can go straight to the lender, or claimant, dependent on the type of policy purchased. Premiums are calculated per £100 of benefit and standalone firms such as British Insurance charges £3.40 per £100 for unemployment cover.
Sara-Ann concludes: "Barclays posted pre-tax profits of £6.08bn for 2008, but is not paying bonuses to its directors. I sincerely hope others follow its example. People are told to behave in a prudent manner, but this obviously doesn't apply to everyone. Those who are recklessly splashing the cash must be reigned in - they're giving the wrong signals to consumers. It appears to be OK for RBS to spend during a recession, but woe betide any customers who do the same, I doubt they'll receive a sympathetic response. Take the £1bn off RBS and make them pay their customers' PPI premiums."