The PPI Debacle – Has Anything Changed?

The whole scale mis-selling of payment protection insurance (PPI) to customers saw the rise of a debate regarding how banks and lenders sell to customers. ‘Routine’ sales were questioned and as a result, changes were made to safe guard the customer…

Emotional vs. rational decisions

Purchases of all kinds are an emotional decision. Customers did not see the loans, credit cards, mortgage as financial products as thus making a rational decision but were making an emotional one. In other words, they saw what they were buying or investing in – the home improvements, the new car etc. – and not whether the product vehicle they were being sold was the right one or not.

Banks and lenders, like all other businesses, knew this and take advantage of the situation, offering various additional products that would ‘enhance’ the customers experience. With financial products for example, they would often ask how would you cover repayments if you were no longer working etc.?

They would sow a seed of doubt, sound a warning bell that made you question how you would pay the loan in such a circumstance. Even if you had other insurance policies, the bank or lender would go on to offer you a ‘magic’ product that for a few extra pounds a month, would make sure that you would not end up in financial problems. You were hooked and you bought the product…

Advised sales – setting out the reasons why

And so, the lines between suggesting a product and an advised sale were blurred. If you take out a loan with a bank, you do not need to take on any other additional product.

It may be a good idea if the policy is the right one for you. It may be a wise and prudent move if you know your job is looking a little shaky in the future etc.

It would seem a responsible thing to do BUT, you still do not have to buy the banks’ own product.

Like car insurance, you CAN shop around and get the right deal for your current circumstances.

If, however, the bank insists that as part of the package that their own product is the one you must have, then they must clearly tell you why – and not just verbally. As an advised sale, they must set this out in writing and clearly show the reasons why, as part of this package, their policy is not the best, but the right one for you at this time.

Breathing space

Consumer law is clear - you have 14 days from signing the agreement to change your mind. Customers also thought that this law did not apply to financial products, but it does…

But now, the Financial Conduct Authority, along with various consumer groups have worked to introduce a breathing space within which products in addition to the main product cannot be offered.

Customers are to be given time and space to consider the main product before they are offered anything else. Customers must be given ALL the information to make an informed decision. And they are not be badgered or hoodwinked.

Practices have changed BUT, if you think you have a claim for PPI compensation act now by calling Payment Protection Scotland.

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