Have You Taken Out A Loan In The Last 10 Years?
Payment protection insurance (PPI) is a type of insurance that offsets the monthly repayments for people that face certain difficulties. Many people willingly purchased PPI to cover them if they lost their job or became ill. However, a number of people were also mis-sold the product, in that they didn’t choose to have it or were misled in some way by the seller.
Anybody that was sold a PPI policy that they didn’t want or agree to should be eligible for a refund.
A number of people, running into the millions, were mis-sold PPI over the past decade. There were several ways in which customers were duped, including:
PPI mis-selling became a serious issue throughout the country and many people have expressed anger against the banks and filed for compensation. Even after winning a refund for the cost of mis-sold PPI, many people have still lost trust in the banking system and it could take a long time for people to trust the banks again.
Payment protection insurance was created to help people pay their mortgages, loans or credit card bills if they lost their jobs or suffered from a disability. Some people did benefit from these policies, but many financial institutions also sold PPI to people that didn’t need it, apparently to increase their profits.
Many banks and other financial institutions made a substantial amount of money from selling payment protection insurance to customers that never used it. A 2004 report from Jobs & Money claimed that Barclays took £350 million in premiums for accident and sickness plans, but only paid out £90 million in coverage. That’s quite a tidy profit.
The PPI mis-selling scandal was executed in a number of ways. Many salespeople were trained to promote the product as much as possible and they often made misleading or wholly inaccurate statements about the benefits of Payment Protection Insurance. As a result, many people paid for PPI coverage that they didn’t want or didn’t need.
Some of these salespeople may have been pressured to use such tactics to sell PPI, but many of them took the initiative to do it on their own. They were paid on commission, so there was great incentive to sell as many PPI policies as possible.
The PPI scandal has gained much more attention over the past few years and many people have filed for refunds for the policies that they have purchased.
The PPI scandal has caused many people to lose faith in the banking system and some surveys have shown that people will not trust the banks again for at least a decade due to the PPI scandal. Many people have become very wary about purchasing PPI or other financial products, even though some of those products can actually be very beneficial.
Many financial claims companies have been formed to help people recover money that they have paid for PPI. However, consumers can still file a claim on their own and are about as likely to receive a refund as if they used a claims firm. Some customers have still decided to file claims with firms, because they feel the claims process is more complex than they want to deal with or they simply realise the value of handing it over to someone else.
The banks have become heavily penalised for mis-selling PPI and some have set aside billions of pounds to cover future PPI payouts. They are also facing increased scrutiny from the Financial Services Authority (FSA) and have lost the loyalty of their customers.
The impact of the PPI claims scandal will probably weigh on them for years to come. Consumer advocacy group Which? stated last year that the price of PPI mis-selling cost the industry about £18.4 billion. The group pointed out that cost was twice as much as the Olympic games.
Many banks have realised that the billions that they set aside for PPI has not been sufficient. They have been forced to put aside even more money to cover their costs. New data continues to show that the number of people that were mis-sold payment protection insurance is even higher than previously thought.
Many people are still seeking refunds for PPI policies that they were mis-sold. The Financial Ombudsman Service said that it is receiving about 2,000 claims every week. The volume of claims has subsided a little over the last year or so, but is still quite high. The Financial Ombudsman Service (FOS) said the problem is likely to persist for years to come.
The FOS has hired 1,000 new staff to process claims since the workload has grown so much and they have recently started charging fees for claims to cover the cost, but people that have legitimate claims still find it is worth filing. The FOS believes that there are still many people that are owed coverage that have not filed a claim.
The PPI claims problem is expected to continue in the months to come as many people are still realising that they have been mis-sold PPI from years earlier and are seeking recompense.
As we now know all too well, PPI mis-selling has been a serious problem over the past decade and the banks know they need to start complying with much stricter regulations. They are also realising that they will need to reform many of these problems on their own if they hope to retain their customers.
Many banks have acknowledged the mistakes that contributed to the PPI scandal. They have pledged to resolve the issues in the near future. However, they have still faced some problems and many consumers are sceptical that they are actually making the necessary changes.
Barclays was one of the banks that was most heavily criticized for its role with the PPI crisis. The bank outsourced its claims handling to Deloitte, which led to a scandal last year. According to an undercover journalist, many claims handlers were instructed to deny refunds to people that had been mis-sold PPI. Deloitte stated that it did not condone this practice and has since terminated its contract with Barclays.
Nevertheless, the scandal has made it even more difficult for the bank to move on from the PPI crisis. Many consumers remain sceptical that Barclays and other banks are really making it a priority to repay customers that were mis-sold PPI. Many customers have been denied claims and been forced to appeal them to the FOS. The FOS and FSA are urging the banks to review claims more objectively to lessen the burden.