Consumer anger over mis-sold PPI continues

Banks face millions of compensation claims

by Russell Shackleford, 5th October 2011

The storm of discontent whipped up by the actions of unrepentant banks in the mis-sold PPI scandal has yet to abate, leading to millions of people seeking to claim a payout from their banks to compensate for the vast amounts of money they may have lost to an errant loan insurance policy.

PPI, or Payment Protection Insurance, is a form of insurance coverage designed specifically for loans and intended to ensure that a borrower is able to continue the repayments on such even if they should encounter a situation which leads to an unpredicted loss of a significant chunk of income.

This may not sound bad on the surface, and the principle behind PPI is none too shabby. However, the mis-sold PPI debacle showed that when banks elect to mislead customers over financial products, any financial product, no matter how well-intentioned, can be swayed to the cause of evil.

So it was with PPI, which the banks turned from a potentially useful product into a source of unlimited profit by encouraging all customers to take out a policy, whether or not they needed it, wanted it or even could use it. This mostly worked by lying to customers over what PPI was - some were not even told that it was optional, or led to believe that it increased their chance of being approved for a loan.

Others were sold a PPI policy even when their circumstances meant that they would never be able to claim on it, or even had it incorporated into the cost of their loan without being told.

Fortunately, the banks are now reaping the consequences of their malfeasance, and have been made to set aside billions to compensate wronged customers. Millions of people are eligible to claim if they were mis-sold a PPI policy by their bank.