UK is Europe’s financial hub where the West’s biggest banks house their biggest financial centres. As anchors of the financial industry, experts said the PPI scandal was unexpected. However, some pointed out from the start that banks had mis-sold several financial products.
It was in 2007 when the consumer group Which? made a collective complaint regarding PPI sent through the then-City watchdog, the Financial Services Authority. Upon the FSA’s further investigation it was found that potentially half the UK’s consumers who had taken out a loan, mortgage or credit card, was mis-sold a PPI policy that cost about £3,500 on average during the time.
Experts said the financial industry reeled from shock in knowing that all high street banks, including taxpayer-saved Lloyds and RBS, had mis-sold the insurance policy to consumers. Despite the shock, banks underestimated the amount they needed to repay for PPI. From a modest £10bn, the amounts rose to £27bn in 2012, where at present, the total bill is now at £29bn.
Despite their misgivings, banks “dragged their feet” on all occasions during the redressing of PPI according to former Financial Ombudsman Chief Natalie Ceeney. She said banks needed to realise the situation as not to their advantage and “shape up”.
Up to this day, banks are still paying for huge PPI claim misgivings, such as rejecting valid consumer complaints.
The FCA intends to impose a nationwide advertising campaign to encourage payment protection insurance claims to ensure all consumers have made a claim before the PPI deadline for 2018 arrives.