The Changes Since the PPI Saga Broke

The mis-selling of payment protection insurance (PPI) is a scandal that has rocked the British banking industry to its core.

As a result, there have been many changes and with the recent news of one major bank facing a huge fine for attempting to ‘fix’ interest rates, the signs that the banking industry is finally being called to account are all there.

But, PPI was something that set the path to reform but, does it go far enough?

FSA to FCA – the banking regulator at the time the scandal broke was the Financial Service Authority (FSA). Although it could make recommendations and lobby banks and lenders about behaviours and so forth, it had no real regulatory or enforcement powers.

The Financial Conduct Authority (FCA) replaced the FSA on 1^st April 2013 and has been described as “the FSA, but with teeth”. In terms of banks, the FCA can and will …

• Ensure that customers are treated fairly
• Encourage innovation in the banking and financial sector, as well as healthy competition
• Identify potential risks within the industry, and take necessary action

It also has minimum standards that banks have to meet in many different areas, including customer service and so on.

7 day window – PPI was sold to customers at a time that was considered to be highly emotional; for example, securing a loan to be able to buy a better family car, or for a mortgage and so on. People do not borrow money for the sake of it, but rather to be able to improve their lives, homes etc. Being told – or given the impression – that their application was more likely to be successful if they bought PPI was playing on people’s emotions.

Now, customers must be given time after they have bought the loan etc. before being offered any additional products. In most cases, this has to be a minimum of 7 days, although there are suggestions that 14 days is a better length of time.

No single premium policies – the selling of single premium policies, where the customer paid for the policy in one lump sum – or, more accurately, the lump sum was added upfront to the loan – has now ended. If a bank or anyone tried to sell you PPI in this way, you can remind them that this is no longer acceptable.

Publish pay out rates – like other kinds of insurance policies, banks and lenders who are continuing to offer PPI to customers are being told that they must publish the pay-out rates for the product. This is an aid to customer who are considering purchasing PPI so that they can see if the policy is right for them.

But, if you think you have been mis-sold PPI, please call Payment Protection Scotland – we know we can help you!

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