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Mis-sold PPI - The Worst Personal Finance Scandal Ever?

09-30-2010 10:51 AM CET | Business, Economy, Finances, Banking & Insurance

Press release from: iSmart Consumer Solutions

New information released by the Financial Services Authority (FSA) could see mis-sold PPI become the worst ever personal finance scandal to hit Britain.
The FSA believes it will receive 2.75 million complaints about mis-sold PPI over the next five years. Compensation to the customers who have been mis-sold PPI policies is expected to top £4 billion.
Could mis-sold PPI become Britain's worst ever personal finance scandal? If the level of complaints continue at the current rate and the FSA is right about the number of complaints it will receive up to 2015, then yes.
Currently the personal pension mis-selling and endownment mis-selling of the 1990s, are regarded as the worst personal finance scandals in British history. Commission driven salesman who mis-sold personal pensions had a hand in damaging the reputations of providers such as Prudential, Abbey Life and Royal & SunAlliance. Royal & SunAlliance was fined more than £1.35m for failing to identify and compensate 13,500 victims while Prudential received a fine of £650,000 for pensions mis-selling.
In the 1990s, Allied Dunbar earned the nickname "Allied Crowbar" for the strong-armed sales techniques it used to get borrowers to take out endownment policies.
Could cases of mis-sold PPI do similar damage to companies selling this insurance?
Figures released by Lloyds Banking Group, last month, shown the company received 41, 874 complaints between January and June this year, just about insurance, the majority being payment protection insurance complaints. 36,121 of the complaints were about insurance products sold by the HBOS division of the Lloyds Banking Group, which includes the Halifax, Bank of Scotland and Intelligent Finance brands. Of the HBOS insurance complaints, 68 per cent were upheld, this suggests serious problems with the company's insurance products.
The Lloyds Banking Group have of course now stopped selling Payment Protection Insurance. Lloyds put the decision to stop selling the insurance, down to increased regulation surrounding the sale of the product. The FSA only increased the regulation surrounding the product because of the amount of mis-sold PPI cases customers were complaining about.
Adding to mis-sold PPI going down in history as the worst personal finance scandal ever, is the fact many banks and PPI providers receive complaints about mis-sold PPI and then seemingly automatically reject them. A record number of customers have complained to their banks about mis-sold PPI this year with almost 30,000 of the cases being taken to the Financial Ombudsman Service to seek further resolution between January and June. The words 'worst personal finance scandal ever' ring true further, when 30,000 complaints to the FOS is put into perspective, 30,000 complaints is three times more than the combined totals for mortgages, investments and pensions.
The biggest loser among the larger providers of PPI was Barclays, who had a staggering 61 per cent of complaints about mis-sold PPI upheld in favour of the customer. However Barclays were not the worst culprit, some smaller providers were found to be in the wrong almost all of the time. All complaints against Eisis, 99 per cent of those against Ocean Finance and 90 per cent of those against Black Horse were settled in favour of the public.In total 81 per cent of the cases taken to the FOS about mis-sold PPI were upheld in favour of the customer between January and June this year.
Mis-sold PPI - The Worst Personal Finance Scandal Ever? Only time will tell, but it sure seems to be going that way.

iSmart Consumer Solutions are a leading expert in obtaining compensation for mis-sold payment protection insurance (PPI) and unfair credit card charges

Since launching, we have managed over £57m in refunds to customers, processing over 1000 claims a week.

We also offer a debt management solution, debtsmart, for customers who are struggling to maintain repayments on unsecured loans and credit agreements.

We have teams consisting of specialist advisors working in-house. Claims made for mis-sold financial products will be handled quickly and effectively by our in-house team while our debtsmart advisors have a proven track record in reducing consumer debt.

iSmart Consumer Solutions
Turnells Mill Lane,

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