Have the Banks Learned from the Mis-Sold PPI Scandal?

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Looking back over the years it is difficult to think of a banking scandal as serious and far-reaching as that concerning mis-sold payment protection insurance (PPI). Claims for the return of mis-sold policy fees have been around for many years now, but a recent upsurge – thanks in no small part to a High Court ruling instructing the banks to repay all such fees – has led to record numbers of claims. The saga has left a serious dent in the reputation of the UK banking industry, and in the bottom line profits of the many lenders involved.

Mistrust in the Industry

Nobody likes to discover that they have been grossly misled but that is exactly what has happened to the many thousands of trusting companies who took out a PPI policy along with a loan, mortgage or other credit agreement in recent years. The widespread flouting of the regulations was uncovered after an in-depth investigation, and the findings really were astounding. It immediately became clear than there was a serious problem regarding PPI, and that it needed to be dealt with forthwith. A full revision of the regulations surrounding the sale of PPI was implemented, with the onus on protecting the consumer.

Still Problems in the Claims System

One would have thought that, following the High Court instruction, claims would have become routine; the truth has been somewhat different. Many customers have found that banks took longer than the recommended time to process their claim, and fines have been levied on financial institution taking this stance. This is why many claimants still choose to use a PPI Claims Company despite the banks apparently being told to process claims themselves. It would appear that the situation is no further forward, with the Lloyds Group being involved in further PPI related scandals in recent weeks.

Moving Forward

So, have the banks learned from the PPI scandal? It’s questionable, but surely one must assume that the huge hit they have taken in having to put aside £14bn – so far – to enable them to handle repayments should have been something of a wake-up call. The UK banks need to re-establish a level of trust with consumers – consumers who are already upset after government bail-outs of financial institutions – and get back to basics, while understanding that it is the customer who provides the money with which they play ball.

July 23, 2013 · Tim Kevan · Comments Closed
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