01 June 2015
Payment protection insurance (PPI) was mis-sold on a scale that is hard to imagine. Hundreds of thousands of customers were mis-sold millions of policies over many years. Customers agreed to buy the policy in the mistaken belief they were making a shrewd financial move to protect their credit.
But, the reality was very different and the reality of claiming PPI compensation is somewhat different today that back in 2011 when the first pay outs started to trickle to customers.
The banks were in a state of denial, unhappy that they would have to pay back the money to customers, possibly as they realised that this compensation bill would run in to billions of pounds.
In the cut throat financial world of banking, a bank with little or no profits is vulnerable to take over and buy outs, thus, banks were worried.
They also thought that they could get away with 'offers' of payment, rather than calculating the full amount due. This derisory offer was more about 'saying sorry', than returning every penny back to the customer.
But, with information pouring out of consumer groups and banking regulators, the customer realised that there was much more to be gained than a derisory offer. Thus, they maintained their stance, demanding that the banks give them everything that was due back to them…
… and they won. With a slow realisation, the banks have finally arrived at the point where they realise that keeping the customer on side is so very important, compared to trying to 'fob them off'.
Banks are desperate to put things right and to regain trust from their customers. The banks have been hit with other scandals that are also costing them money; the alleged fixing of the foreign exchange rates and interests, a complex case, is costing the banks billions of pounds in fines.
They can no longer afford to do what they like, when they like and how they like. The government has responded with a beefed up regulatory body - the Financial Services Authority was replaced with the Financial Conduct Authority a few years ago - and so hopefully, such scandalous behaviour should not go unchallenged.
It could be. Banks are more willing to look at claims in depth, and although there are cases of legitimate claims being denied by the banks, the customer has one more course of redress in the shape of the Financial Ombudsman Service.