2012 has seen a staggering rise in PPI complaints against UK banks and financial institutions, with the financial ombudsman claiming PPI is by far the single most complained about a financial product this year. It’s not surprising given that the banks reported 2.2 million claims in the first six months of 2012, and those numbers are steadily rising. Yet how did PPI become such a huge scandal, and why have complaints rocketed in the past 18 months? There are three major reasons– the extent of the miss-selling, customer backing by the Financial Service Authority (FSA), and the increased awareness of making a claim.
- PPI made banks a lot of moneyPPI miss-selling has reached such epic proportions because the product was mis-sold by such a large number of financial and non-financial institutions. To give an idea of the extent of the ‘epidemic’, almost every high street bank and credit card company mis-sold PPI, as well a huge proportion of high street retailers who mis-sold PPI with their store cards. The reason for this was that PPI was an incredibly lucrative product. Sales staff were encouraged to use aggressive sales techniques and routinely sold policies to customers despite knowing they’d never be able to make a claim. Even people who didn’t succumb to this didn’t escape as PPI was often automatically added to their loan or credit card without their knowledge. It wasn’t until a ruling by the FSA in 2010 that the PPI miss-selling was finally curbed (see below). However, PPI has been mis-sold since the 1990s (with some cases going further back to the 1980s) which means that there’s still plenty of complaints to come.
- FSA rules against the banks the rise in PPI complaints is a victory for the consumer but it’s been a long time coming. PPI miss-selling was first raised by which? Magazine 1998. They campaigned alongside other Consumer Rights bodies until 2005 when the Citizens’ Advice Bureau launched a ‘super complaint’ about PPI to the Office of Fair Trading. This allowed the FSA investigated the PPI sector and to start fining companies, yet unbelievably banks and financial institutions continued to mis-sell PPI whilst also ignoring or rejecting legitimate PPI complaints from customers. It wasn’t until at High Court ruling in 2011 that these practices ceased. Now banks had to obey the FSA’s rules which required banks to make the complaint process simpler and to review past sales to see if customers have a claim for miss-selling.
- More people know they’re entitled to claim since the ruling the banks are meant to contact any customers who they believe may have been mis-sold PPI. That’s the theory, the reality is that this isn’t happening very quickly if at all. However, the good news is that more people are aware of PPI miss-selling and are checking to see if they are entitled to a claim.
Yet despite the increased awareness and a record number of claims, many people are yet to pursue a claim. It can be daunting going through old paperwork to find out whether you’ve been miss-sold PPI, but with the average claim being around £3,000 and a record claim of £142,000 recently reported by the BBC, it’s worth checking everything. For expert advice and claims you can get more advice on the Financial Services Authority website or you can speak to a PPI claims specialists such as Gladstone Brookes. In 2011, it dealt with 44,600 miss-sold PPI claims and claimed back over £108m. Speak to an advisor on 08000 469 144 or complete their online PPI claim form.