The Mis-Sold PPI Scandal – Who Was to Blame
Payment protection insurance – or PPI as it’s more commonly known – has cost millions of people in Britain thousands of pounds. Such a wide level of mis-selling can only have been caused by a willingness to mislead customers about the product – and it’s this that the lenders got so incredibly wrong. But this concerted attempt by banks and loan companies country-wide to maximise profits could not go unnoticed forever.
The problems started when staff working for the lenders were given high targets regarding the selling of PPI. Rather than offering PPI to customers who would benefit from it, they tried selling it to everybody, regardless of their needs. The reason lenders were so keen to sell it to everybody was because of the very attractive profits it reaped.
These high profit margins were achieved largely on two counts. Firstly, many people taking out PPI would never have been able to claim on the policy in the first place because of significant exclusions – for example, if a customer had a pre-existing condition they would not have been able to claim. Secondly, premiums were often ridiculously high – even if a customer were able to claim, they wouldn’t get more than a small proportion of the money they paid in to the plan.
If the lenders had been upfront about this they’d have done nothing wrong. Then again, nobody would’ve wanted to buy PPI. So instead, they misled customers – making them believe the insurance was necessary for the loan to go ahead for example, or not even making it explicit that the insurance increased the overall cost of the loan. Without this crucial information, many customers weren’t able to refuse PPI when they would have wanted to.
Many customers are rightly angry not only about what the lenders got so badly wrong, but that they refused to acknowledge they had done anything wrong. Their stubbornness was confirmed by them dragging their feet over handling complaints and attempting to challenge court rulings. But despite just how wrong the lenders got it, the authorities have decided that they simply have to do all they can to finally do right by their customers.
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