Why banks continued to missell PPI
For the hundreds of thousands of people caught up in the missold Payment Protection Insurance (PPI) scandal it may seem strange that financial institutions continued to wrongly sell products for so long. It is likely that, long before authorities intervened, banks knew that there were PPI problems being noted. However, why did it take them so long to right their wrongs of misselling the insurance product?
There are a number of reasons that banks kept misselling PPI, even though many may have started to realise that there was a problem. PPI is a carefully developed product that is put in place to safeguard loans. Consumers taking out credit agreements such as mortgages or car loans could protect future repayments with PPI products so that if they lost their job or became ill, repayments could continue. This was hugely beneficial for banks as it meant that they could reduce the risks of financial loss, meaning that PPI sales were a good thing.
PPI sales were also bringing in the financial industry a lot of money, with very few people ever having to make claims. In addition, many of those who did seek to make claims discovered that their policy was worthless, a fact which initiated much of the scandal seen today.
Banks have been put in their place by the Financial Services Authority (FSA) and they are now paying the consequences of misselling PPI to thousands of people. Making a claim is vital for those who feel that they have been wrongly sold insurance, and with the average compensation worth £2,700, taking the trouble to complain can be well worth it.