PPI - The headlines keep appearing!
“Barclays sets aside a further £1bn over forex rigging and PPI mis-selling’ screamed the headline from The Guardian, 29 April 2015.
The signal from the bank is clear; it expects 2015 to be another tough trading year in which it faces yet more barrages of PPI compensation claims, and fines for serious rigging of the foreign exchange rate.
Not the only bank
Of course, we need balance in the argument and Barclays, by no stretch of the imagination, are the only bank to have let their customers down by over-charging them for a policy that was, for many people, worthless.
Not only was the PPI policy not wanted or needed by their customers, it was also a dud in the sense that making a successful claim was unlikely to happen; the policy had an overall pay out rate or 15%. Car insurance claims in any given year, can have a success rate of 80% or more.
But, as well as the fact that the banks made huge profits off the backs of its customers, it was also doing itself an injustice too; they were crushing the trust of ordinary people in the baking system in the UK, as well as themselves.
Bully boy tactics, fuelled by greed and profits
PPI was an incredibly expensive product that, for the money you paid every month, offered very little protection. There are many cases, however, in which people paid for it but were unaware that the policy was not applicable to them; in other words, they were not ‘covered’ by it.
But, the very expensive nature of PPI meant two things:
- The banks were making huge profits on the back of a product that was of little, if any use to the majority of people who were ‘sold’ it
- Setting sales targets for its staff, when the banks’ representatives sold PPI to a customer, they received commission – who wouldn’t want to sell hundreds of policies if it meant that their pay packet bulged at the end of every month?
A turning tide
But, the tide started to turn back in 2012 when the wholescale compensation process started, although this had a fractured start.
Things were going swimmingly well until it was discovered that in 2013 and possibly that start of 2014 too, that some customers were not getting all their money back, the trust in the banks was dented again.
Add to this the possibility that many of the high street banking names were also involved in rigging the foreign exchange rates too, it is easy to see why banks, regulatory authorities and consumer organisations are working hard to restore this lost faith and trust.