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Archive for tag: PPI Mis-selling Scotland

Payment protection insurance mis-selling scandal – how did it all come to light and why did it happen for such a long period?

Payment protection insurance (PPI) is now the most talked about product in the UK, but for all the wrong reasons.

Mis-sold for many years and, even when this mis-selling was challenged, it seems to have taken a long time to get the situation resolved. But how did it all start…?

A policy designed to protect borrowers

Borrowing money is not without risk to you, the borrower, or to the financial institution. Bad debts can bring a bank to its knees and living in debt is no fun for anyone. PPI was designed to protect the borrower.

If you were unable to work due to ill health, took maternity leave or suffered other kinds of loss of income, then PPIshouldhave made the repayments on the loan which, in theory, protected you from a deepening cycle of debt.

However, it was mis-sold; as a policy, it has narrow terms and conditions that some borrowers were not made aware of. Fuelled by gargantuan profits and hefty commission payments per month, borrowers were effectively duped in to buying the policy that they didn't need or want.

2005

This mis-selling of an expensive, useless product for many people, carried on unabated until 2005 when the Financial Services Authority took over regulation of the general insurance market. Now known as the Financial Conduct Authority, its predecessor soon realised there were issues with PPI.

But it took a complaint raised by the Citizens Advice to the Office of Fair Trading (OFT) to start the call rolling. The 'super complaint' they submitted consisted of the following point:

  • Excessively high premiums
  • PPI offered, in many cases, only partial protection, preventing seemingly reasonable claims
  • Mis-selling that included, in many cases, high pressure tactics
  • Slow and unfair claims process when a consumer did have an eligible claim

2009

It took 4 years of wrangling and arguments before action was taken. The OFT handed the case to the Competition Commission who ruled that the sale of PPI alongside credit products such as credit cards and loans, should be banned.

2010

In August of the following year, the Financial Services Authority decreed that customers who had been mis-sold PPI were eligible from compensation and the process started…

2015

The number of PPI complaints remain high, but there are still many people who do not realise they have a claim. Are you one of them? Are you certain you were not mis-sold PPI?