When it was revealed that banks were mis-selling PPI, a scandal hit as everyone started to claim back their money. People lost their trust in the banks and the products they were offering. However, it looks like the banks have not learned from their mistake as more products are being mis-sold. Could the PPI scandal really happen again?
How PPI was Mis-sold
Payment protection insurance was sold as a way to protect the repayments on loans and credit cards. If someone was made redundant or could not work due to an illness or injury, the insurance would make the repayments for the first 12 months. However, not everyone could benefit from this protection.
It was only for those who were employed (not self-employed) and had to leave their job through no choice of their own. Those who left the workplace would not be able to make a claim. Those who did not have a job for whatever reason would not have needed the insurance and not everyone was made aware of the product they were agreeing to.
Lenders have now had to pay thousands of pounds in compensation to those who were mis-sold the product, either because they did not need it or they were not made aware of it in the first place.
Protocols Now in Place
Those selling products like PPI now have to follow certain protocols. They will need to make sure the customer is aware of the product and understands more about the terms and conditions. When the protocols are not followed, the lender will have to pay the customer compensation for mis-selling the product.
These protocols have been put in place for many products, including charges for various types of bank accounts, income protection insurance and extras for accounts. However, banks still face penalties as they fail to meet the protocols and mis-sell various products to their customers. With banks now under much more scrutiny, it could lead to another PPI scandal as more people claim money back for services that they were not made fully aware of.
Staff Have to Meet Quotas
Staff members from some of the top banks have blown the top off a number of scandals happening within the workplace. The staffs have sales quotas that they have to meet and face disciplinary action if they fail to do this. Members of staff have been caught adding policies onto accounts without going through all the information for customers on the receiving end. This could lead to another PPI scandal if banks fail to put the customer first and determine the need for the product instead of trying to sell and make profits.
The PPI scandal has hit the banks hard and many would think that they would have learnt their lessons. However, it seems not as many continue to mis-sell products to their customers just to gain more profit. The PPI scandal led to thousands of people gaining compensation, so far totalling in the billions, it is only a matter of time before banks lose their profits again by having to pay out more compensation.
This article is an original contribution by Julie Cheung.
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