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Scotland Wide PPI Specialists

Re-Cap: The *Updated* Story of PPI

15 January 2018

The payment protection insurance (PPI) mis-selling scandal and the compensation being paid to customers now has its days numbers. With the PPI compensation deadline set for August 2019, the writing is on the wall but how did the whole mis-selling scandal start? How was it discovered?


Consumer groups

Many consumer groups started raised concerns about PPI back in the 1990s. PPI had been sold alongside loans and other products for many years, but it wasn't until many years later, 2005 in fact, that the then Financial Services Authority (FSA) took over regulation of the insurance market.  These groups were concerned about not only the cost of PPI but HOW it was being sold to customers.

The Financial Services Authority

It was the FSA - now the Financial Conduct Authority (FCA) - who identified that the sale of PPI was not to the benefit of the customer.

In 2005, a 'super complaint' was lodged with the Office of Fair Trading (OFT) highlighting several complaints including:

  • Inflated prices of premiums
  • The partial protection offered which excluded several reasonable claims
  • High pressure sales tactics
  • The slow and unfair claims process

PPI Sales Stopped

By 2006 complaints and opposition to PPI was growing but it wasn't until 2009, that the sale of PPI alongside other financial products was stopped by the Competitions Commission. It was felt that customers needed to focus on the priority - obtaining credit - rather than having other products thrust at them.

But the banks were holding firm and took the ruling to court, but the original decision was upheld. By August 2010, the Financial Services Authority published a consultation document that all customers should be compensated in the PPI mis-selling debacle.

The Compensation Floodgates Open

This process started, with customers encouraged by consumer groups to start making compensation claims, the banks once again attempted to force the process to stop by taking the decision to a judicial review.

During this time, only one bank continued to make compensation payments to its customers but once this judicial review had proved unsuccessful, the compensation floodgates were opened. The banks had nowhere else to hide and now had thousands of customers to compensate for the mis-selling of PPI, resulting in the banks effectively 'giving back' billions of pounds in compensation.

The Ups and Downs of PPI Compensation

But, the story isn't all plain sailing from this point on. The huge numbers of complaints that the banks are having to process has meant that they are falling behind and that cases are not being processed within the timeframe required.

Banks were fined as a result. And then there came the additional story of commission payments and how one customer, by winning her case, opened the floodgates even wider when it came to PPI compensation.

PPI Deadline 2019

It is a story with many ups and downs, but the end is nigh. And if that means you are yet to make a claim, check today if you have PPI - and call Scottish PPI Claims for help and advice on how to claim your money back!