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Archive for tag: PPI Debacle

Making Waves – How the PPI Debacle Forced Change in the Financial and Banking Industry

The compensation process for mis-sold payment protection insurance (PPI) began in earnest back in January 2011. With £32.9 billion already repaid to customers, there are more claims to come - 2019 will be the year that the PPI debacle draws to a close. Will you be left out in the cold?

Waves

But, as a consumer, you may be wondering what has changed to stop something like this happening again.

There have been changes, some of which are specific to the sale of PPI and others that inform good practice across banks and lenders in general.

1. Separate sales

One of the biggest issues with PPI was that it was sold at the same time as the main product, such as a loan. Banks and lenders did, to a certain extent, play on the emotions of their customer, selling them an additional product at a time when they would agree to it because they thought it was important to their loan application.

2. Changes in 'advised sales'

People also thought that when a bank or lender suggested PPI they were in fact, advising them to buy it. Banks argue this was not the case but customers all over the country beg to differ. And so do we! This is why the Financial Conduct Authority has changed a rule: if a bank is advising a customer to buy a product, they need to tell them why in writing.

3. Make terms of sales clearer

Banks and lenders should no longer be offering additional products alongside loans etc.at the time of sale.They should leave a gap of at least 7 days before they offer you an insurance product and make it clear that not buying the product will not affect their application for credit.

4. 'Opt-in' online

Another common issue was that when people bought credit cards or applied for loans online, the 'do you want PPI?' box was already ticked. Unless you scrolled to the end of the terms and conditions, you would have failed to see this. You also wouldn't get a chance to examine whether this was worth paying for. In other words, you could be paying for an insurance product that did not cover you.

5. PPI is no longer sold

In most cases, PPI has died a natural death as a result of the mis-selling scandal. There are other similar products, such as income protection insurance, that are far superior products and worth the money.

If you have PPI, you could have a claim for compensation. Why not call us now for a no obligation chat?

The PPI Debacle – Has Anything Really Changed?

The massive mis-selling of payment protection insurance (PPI) saw the rise of a debate regarding how banks and lenders sell to customers. 'Routine' sales were questioned and as a result, changes were made to safe guard the customer…

Change

Emotional vs. rational decisions

Purchases of all kinds are an emotional decision. You buy food, for example, because you need it to survive, without it, you go hungry.

Customers applying for loans, credit cards, mortgage etc. as financial products are making an emotional decision. In other words, they saw what they were buying or investing in - the home improvements, the new car etc. - and not whether the product they were being sold was the right one or not.

Taking advantage

Banks and lenders, like all other businesses, knew this and take advantage of the situation, offering various additional products that would 'enhance' the customer's experience. With financial products, for example, they would often ask how would you cover repayments if you were no longer working?

They would sow a seed of doubt, sound a warning bell that made you question how you would pay the loan in such a circumstance. Even if you had other insurance policies, the bank or lender would go on to offer you a 'magic' product that for a few extra pounds a month, would make sure that you would not end up in financial problems. You were hooked and you bought the product.

Advised sales - setting out the reasons why

And so, the lines between suggesting a product and an advised sale were blurred. If you take out a loan with a bank,you do not need to take on any other additional product.

It may be a good ideaif the policy is the right one for you.

It may be a wise and prudent moveif you know your job is looking a little shaky in the future etc.

It would seem a responsible thing to do BUT, you still do not have to buy the banks' own product.

Like car insurance, you CAN shop around and get the right deal for your current circumstances.

If, however, the bank insists that as part of the package that their own product is the one you must have, then they must clearly tell you why - and not just verbally. As anadvised sale, they must set this out in writing and clearly show the reasons why, as part of this package, their policy is not the best, butthe right one for you at this time.

Breathing space

Consumer law is clear - you have 14 days from signing the agreement to change your mind. Customers also thought that this law did not apply to financial products, but it does.

But now, the Financial Conduct Authority, along with various consumer groups have worked to introduce a breathing space within which products in addition to the main product cannot be offered.

Customers are to begiven time and spaceto consider the main product before they are offered anything else. Customers must be given ALL the information to make an informed decision. And they are not be badgered or hoodwinked.

Practices have changed BUT, if you think you have a claim for PPI compensation act now by calling Payment Protection Scotland.