Payment Protection Insurance isn’t a bad thing on paper by any means. It should offer a person who is taking out a loan the chance to be insured against repayments if they have a sudden change of circumstances. But it’s come to light that these policies were sold to people under misapprehensions, and that’s led to serious consequences for the lenders. There are multiple examples of unethical conduct when selling PPIs. Sometimes customers who were already unemployed or retired were sold the insurance (which is basically there to insure you against unemployment). In other instances people were told that they had to pay the insurance to get a loan, and that they couldn’t get the same insurance from an independent company.
The fallout was that the government ordered all unfairly sold PPIs be paid back to the customers in question, which meant a lot of money dropping out of banks in one go. But where was the most significant upset for a bank? It seems that Alliance and Leister were the main culprit, and were fined seven million pounds, as well as having to give back unfairly taken cash, and also facing strong criticism for their conduct from the FSA. This was the highest fine handed out to any of the money lenders.
But it’s not all bad where Alliance and Leister is concerned. This bank, along with the others owned by the parent group Santander, was one of the fastest to respond to customers’ claims. The Banking Association spent a lot of time appealing against having to repay cash, because they argued that new rules shouldn’t apply to old sales. But Santander’s groups forged ahead with customer complaints, so in many ways Alliance and Leister has been one of the most helpful lenders to customers.
The claims keeps racking up, with two billion pounds set aside by banks for repayments. It’s hard to see how this became such a huge problem. It seems one of the issues was offering bank staff cash incentives for selling PPI, without fully briefing them on the rules of the policy.
It will take a while for all of the claims to be processed and more and more people are discovering that they’re been victims of the deception each day, so you should check to make sure that you’re not one of them.
See how PPI claims have cut into lenders profit.
© for Uber Articles, 2011. |
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