Banks lambasted by FSA over PPI scandal

Stinging criticism of lenders' attitude to PPI claims

by Luke Thomas, 8th July 2011

The attitude of the banks concerning the mis-sold PPI scandal has been heavily criticised by regulators.

Despite the billions of pounds that lending institutions have been forced to set aside in order to compensate wronged consumers for the mis-selling of expensive and often useless Payment Protection Insurance, the higher-ups in the financial services sector have failed to change their ways and other, similar money-spinning schemes are likely to be on the way, it has been warned.

Margaret Cole, the director of enforcement at the FSA , which is soon to become the FCA as the role of the watchdog is split into two separate organisations, stated that treating customers poorly and selling inappropriate and pricey financial products like PPI was widespread and did not seem to garner any punishment or change of approach from the banks.

Calling for a "fundamental change in attitude", Cole took top bankers to task over their lack of concern that they were treating their customers poorly. "If a supermarket sold rotten food it would definitely go out of business," she lamented, comparing this to the financial services industry in which maltreatment of clients is par for the course and rarely leads to any serious repercussions, let alone such unsavoury firms going out of business.

Mis-sold PPI is one of the biggest financial scandals of recent years, with banks encouraging millions of borrowers to take out insurance alongside their loans which was supposed to protect them in the event that they should face a sudden loss of income.

Instead, most customers found that they had ended up paying over the odds for PPI policies which frequently turned out to be utterly worthless, with many unable to claim on the insurance if they did need it, due to having been sold policies for which they were ineligible.

Find out more about how you could make a mis-sold PPI claim.

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