How did the PPI Scandal Change the Financial Landscape?
Here in the UK, one of the most powerful industries is the financial sector. From the smallest banks to the largest banking groups, high street banks and well known lenders have been trusted by their customers for years.
The mis-selling of PPI knocked this trust and confidence in the banks. Customers no longer feel that they can rely on the banks to have their best interests at heart.
This plummeting trust and confidence hit the banks and lenders in so many ways but the PPI mis-selling scandal has forced banks and regulators to make changes – and they have worked hard to win back the trust that they previously trampled on with PPI.
#1 Advised sales
Many customers were advised to buy PPI but this was not with the customer’s best interests in mind. They were told it was the best policy for them, or that they needed it.
They were told it offered them all kinds of protection and for the sake of a small additional premium each month, the customer would have peace of mind to be protected.
This was not the case. The advised sale was nothing to do with what was best for the customer, but how much profits and commissions could be boosted by selling yet another PPI policy.
What’s changed? Advised sales now have to have the reasons of why the policy is the best product for the customer in a written statement or letter. This document should clearly set out why the policy is suited to the customer and their circumstances.
#2 Publish statistics for pay outs
Many people were surprised to learn that only 15% of claims via PPI were successful, an incredibly low rate for pay out for an insurance policy. The process of claiming was long and tortuous too.
What’s changed? If banks and lenders are to continue offering PPI and other insurance products, they must publish their pay out rate on an annual basis and make this information available to customers.
#3 Offer nothing else but the loan etc.
Many customers felt they were bamboozled into buying the policy alongside their loan etc. It has been noted that for the vast majority of customers, applying for a loan is an emotional decision and that being offered additional products is unnecessary and confusing.
What’s changed? Customers at the time they buy the loan should not be offered any further products. There should also be a period of time between the loan application and the customer being offered insurance products and so on of around 7 to 14 days.
Do you have a claim for PPI compensation?