This is an ongoing situation in England. The banks charged illegally, at least allegedly, payment protection insurance on loans, which now has to be repaid. It is estimated to cost £3 bn for Lloyds banking group on its own. I must say I worked at a bank at the time this was happening. And although I had nothing to do with the product I was aware of the miselling and to be quite frank wide spread illegal operations going on. They were ripping people off billions and in many cases ruining their lives over things that were easy to sort out. Sometimes mortgages were falling through as a result of bank error and people had to bankrupt because of bank created problems with short term loans. Here is the link to the story. http://www.bbc.co.uk/news/business-13291640
The questionable practice of banking is in large part (IMHO) due to self-regulation. The problem here is that the bank doesn't have a job where they "care" for the customer-like physicians, credit unions, or even social media might. Banks have a careful balance between "risk" and "expense", Arguably all markets do, but for banks it's more clear profit is based on that nearly alone. With the self-regulation what banking has done successfully is lower their own personal risk. Risk is an essential element to any efficient marketplace. In the traditional market what risk is taken on by a company is that companies risk-it cannot be bought and sold. As with what happened with sub-prime, the bank was able to engage in high-risk behavior, and then sell it at face value, without disclosing risk (when the market was young it was at face value). the traditional market; one where a person or a company is responsible for the risk that they undertake, is in all ways preferable IMO. If we want a non-government regulator, and we have trouble finding a population concerned with "safety" in that field (that population to regulate it) may I suggest the customer, as credit unions do? Personally i cannot think of a "very good" regulator population and believe that until one is found without a conflict of interest, self or public regulation should not be practiced by banks.
Interesting. Thanks for posting. I believe we have something similar in the US, but I am self insured for something of this nature so I am not sure.
There was an out and out willful intention to illegally take peoples money and lie to them when I was working at a bank. It is indemic within the industry.