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Scotland Wide PPI Specialists

PPI Mis-selling Scandal

25 January 2016

Bitter accusations and recriminations - how the PPI mis-selling scandal open a very large can of worms

With thousands of people having claimed their money back, and many more thousands waiting to do so, the ripples of the mis-selling of payment protection insurance (PPI) have been felt far and wide. Knowing how and why it started gives an idea of the scale of the problem - and why now, banks are paying pack billions of pounds in compensation.


There has been much written about commission, how much sales representatives were making - all without the consumer knowing. There has been a recent case in which a customer has won a substantial amount of compensation, as she was not made aware of the level of commission the broker was receiving for selling PPI to her.

This could, potentially, open up yet another can of worms in the mis-selling of PPI saga.

However, some experts and consumer groups are in no doubt that commission paid to sale representatives was a significant contributing factor in the PPI mis-selling scandal and, why it is a saga that is as big as it is.

Some bank staff, according to Which?, were paid a staggering 87% commission of sales of PPI. At the same time, these sales were also making huge profits for the bank too.

There is no doubt that these factors, coupled with sales targets, made for a fertile breeding ground for the mis-sale of PPI. Incentive schemes meant that sales people became focus on their own success, even if this meant selling an expensive insurance policy to people who didn't need it or want it.

Why was it not stopped sooner?

There have been all kinds of changes in recent years within the banking industry, including the powers that the regulatory authority has to act. At the time that PPI was being sold on a wholesale basis, the regulatory authority, the Financial Services Authority (FSA) had very little, if any power to make a difference.

This came to light during the compensation process and thus, there is a new regulatory authority, replacing the now defunct FSA - the Financial Conduct Authority has far more power to make things happen.

In effect, a scandal of this should not happen again.

The PPI scandal has also made a huge difference in how consumer view their rights too. And you have the right to claim PPI compensation if it was mis-sold to you. Find out more today - contact Scottish PPI Claims.