Guess what’s the most complained about product in UK history?
No, it’s not that terrible new hair gel or those uncomfortable shoes. It is, in fact, a financial product: payment protection insurance, also known as PPI policies.
According to the Financial Ombudsman Service, complaints about payment protection insurance have outpaced complaints about nearly anything else.
First, here’s a little bit of background. When a person takes out a loan, the banking industry sometimes tries to sell them a particular type of insurance that will ensure repayment of the loan in the event that the borrower dies, becomes ill, becomes disabled, loses a job or otherwise faces circumstances that might prevent him or her from earning enough money to be able to repay the debt. This insurance is called PPI, and typically it covers the minimum loan payment or overdraft payment for a predetermined term, such as 12 months.
In theory, that sounds like a pretty decent idea.
Unfortunately; however, these claims were rampantly missold throughout the first portions of this century. Some companies developed sales scripts that encouraged their salespeople to merely say that loans were protected without mentioning any of the details. Other salespeople incorrectly gave nonfactual or misleading information about the products. For example, they might state that purchasing PPI insurance might improve a borrower’s chance of obtaining a loan. Or worse yet, they may state that the PPI insurance was flat-out mandatory. Neither of those statements are true.
By the time that this scandal came to light, it turned into the biggest financial scandal in UK history, and it is expected to cost the banks more than 35 billion pounds.
The scandal came to light in 2007, when the OST made a formal referral regarding missold PPI policies. Within two years, by 2009, the Competition Commission stated that banks that sell loans ideally ought not to sell PPI at the same time.
It took a few more years for the depths of the scandal to come to light. By 2012, PPI became the most complained about financial product in the UK history.
The complaints made to the Financial Ombudsman Service rose to 1.2 million in 2012, which at that point represented about 60% of their case load.
In 2013, Lloyds Banking Group was fined 4.3 million pounds for delaying PPI payout, and in 2015 they were fined an additional 117 million pounds from mishandling PPI complaints.
If you think you were missold a policy, please contact us.