Surprise slice of humble pie

INSURANCE companies may be starting the long journey back from the Land of Consumer Contempt. I was quite looking forward to spitting venom when I opened a new report called "A Fit and Proper Partner" which canvassed insurance executives on their potential for replacing elements of state welfare provision.

With the welfare state deflating, insurers should have their foot in an open door. But many of the execs are surprisingly straightforward about the industry's shortcomings.

Respondents were almost unanimous in seeing the companies' relationship with the Government as "poor and characterised by mutual suspicion and distrust". Public image is recognised as grotty as well, to the point where it is seen as a major obstacle to the industry being allowed to "help out" on welfare provision. The companies set themselves the less than ambitious target of supplementing state provision, rather than replacing any element - whether pensions, sick pay or medical cover.

Could this be a watershed? A way forward would be simpler, cheaper policies and decent service. Then consumers might start buying willingly, even without the tax relief sweeteners the report notes insurers still pine for.

EXAMPLE number 47 of a building society not putting its members first. A reader who claims a perfect 15-year repayment record on his Bradford & Bingley mortgage is up in arms at being excluded from the society's special rate on offer from its Mortgages Direct telephone service. "Cut the cost of your mortgage whether you are moving or remortgaging," says the leaflet, citing a standard variable rate of 6.95 per cent. This is more than 1 per cent lower than the typical high- street lender - including that on mortgages sold through the Bradford & Bingley's own branches. In the small print, however, the leaflet adds that the offer is not available to existing B&B borrowers unless they are moving house. The society explains it cannot "afford" to offer the deal to all its borrowers.

However, there is a happy end for this unhappy borrower. The society is prepared to offer the reader a special deal, a spokesman told Your Money. Apparently a smattering of existing borrowers received the new telephone-only deals via a mailshot. "It was a computer cock-up," says the spokesman.

Any more examples of existing customers not being put first by societies? Send them in to Your Money. Note: we cannot return anything sent in or reply individually.

MORE hot air from Virgin Direct, the new PEP arm of Richard Branson's condoms-to-cola empire. Virgin Direct announced it had pulled its amusing campaign of adverts parodying competitors' logos after a solicitor's letter from (again) the Bradford & Bingley. New Virgin adverts will claim Virgin "must be doing something right". Yes, Virgin is increasing the pressure on other PEP managers to provide better value. But the worrying side to its advertising was the suggestion that its new corporate bond PEP is an alternative to saving with a building society. No, it's not. It's a whole lot more risky. Most younger investors shouldn't touch it even with the protection of a Branson condom.