According to recent history, the UK’s biggest financial scandal began with bank employees endorsing the insurance policy as a requirement for a loan, mortgage or credit card. But why did employees want to sell more insurance policies even if it didn’t benefit consumers? It’s more than just profit.
While bank employees and financial advisers could earn more than 10 per cent of every insurance policy they sell, the UK banking culture sadly has a “culture of greed”. In the last two decades, bank managers pushed their staff to sell insurance products and increase their volumes through an incentives system guaranteed not to include the satisfaction of consumers.
The Financial Services Authority, the City watchdog during the time, said the incentives system needed to be changed. Banks are now implementing a consumer-centric system, although most bank employees still feel the pressure of having to sell higher volumes of insurance policies.
To prevent scandals similar to payment protection insurance, today’s new City watchdog the Financial Conduct Authority had launched three probes to determine more technicalities that initiated the PPI scandal. However, because it appears as a form of “bank-bashing”, Chancellor George Osborne called on the FCA to cease the probes.
Today, banks have to repay more than £27 billion for the two decades of insurance mis-selling.