27 October 2014
Whichever way to choose to view it, the mis-selling of PPI has changed the way we do business with the banks; no longer safe in assuming that they have our sole best interests at heart, we are now beginning to question them more and more on why they certain things the way they do…
No longer content to be told what is best for our own finances, we are taking back control and the PPI scandal has had some welcome and some not-so-welcome consequences…
Spam texts - everyone hates the unsolicited short messages that are text to us on an almost daily basis, in some cases. The marketing ploy of clever opportunist, some customers were duped by them, especially those that guaranteed or promised they were entitled to thousands of pounds in cash - only to find it would cost them hundreds of pounds!
WOW! factor - back in 2008, when the issue of mis-sold PPI was first raised, no one had a true sense of the scale of the problem. And so when you realise some 6 years later that the collective compensation paid out thus far is bigger that the London Olympic budget of 2010, you get a better idea of the scale of the mis-selling issue.
Unexpected and very welcome windfalls - some people did not realise the impact that claiming PPI compensation would have on their personal finances. Duped by banks for years, they paid for an insurance product that was useless. However, it is a double edged sword as actually the PPI compensation amount you receive should put you back where you would have been if you had not been paying PPI premiums. In effect, it is not quite a windfall but your own money that is due back to you. However, whether it is a few hundred pounds or £65,000, it is a welcome bonus… even if it is yours.
Jobs - the Financial Ombudsman Service, for example, have taken on more staff to deal with the huge PPI compensation role it is now finding itself playing. Some banks, in order to meet the deadline for responding to PPI compensation claims are finding they are not only needing to take on extra staff but also to redeploy some staff from other areas.
Changes - the way PPI was mis-sold has raised several questions about the rate of commission staff are offered, as well as the profit margins in some products that banks sell. These two factors combined mean that the breeding ground for mis-selling was set. Incentives are all well and good but when they outstrip salaries, there can be problems, as PPI has shown.
Consumer power - what the PPi mis-selling scandal has also shown is that customers are now savvier and more knowledgeable than they ever were. Knowing that bank products are covered by consumer law and are not part of hallowed ground, have reminded customers that they are perfectly entitled to question why they should buy a product etc.