For years now, British banks have been paying back money owed for mis-selling PPI. And while they have had to pay out a lot of cash for successful PPI claims, the most damaging factor may well concern their reputation and the loss of their customers’ trust
Anyone who is planning to claim for mis-sold PPI should be aware that there now is a deadline in place for all PPI claims. The date to keep in mind is 29th August 2019. That obviously seems like a while away yet, but with a deadline in place, people will be much more motivated to make a PPI claim, so it’s a good idea to make sure you’re at the top of the queue.
For the banks, the deadline is good news, as from then onwards they will be able to get back to regular business, without the added expense of successful PPI claims flooding in. That being said, while the PPI saga has been going on for quite some time, the announcement of the deadline has once again reminded the public of the original betrayal. So, it begs the question: how has the PPI scandal impacted British Banks?
Trust and reputation in tatters
Since the 17th century, people in the UK have entrusted banks with the safekeeping of their money. Over hundreds of years, British banks have evolved and established themselves as powerful financial institutions. With that in mind, it’s fair to say that the public was shocked and appalled to learn that their trusted banks have duped them out of what is, collectively, billions of pounds. These were customers who paid for services such as loans, mortgages, credit cards, and overdrafts. And only those who looked closely at the paperwork will have noticed an additional charge for ‘payment protection insurance’.
Since it was first uncovered, PPI claims have been consistently paid out and cost banks an incredible sum of money. In fact, over six years, banks have paid out over £27 billion. While this is undoubtedly a massive impact on British banks in regards to finances, the entire scandal has left a bad taste in the mouths of the British public. With minimal trust in banks that now have shady reputations, the years following the PPI claims deadline will need to be spent regaining lost ground and rebuilding lost trust.
Will there be a sudden surge of PPI claims?
Now that anyone who is yet to make a PPI claim has just under two years to do so, there’s a very good chance there will be an increase of applications over this period. The average payout for a PPI claim is around £3000 — a substantial amount of money that will convince many to at least check if they are owed PPI. This, as well as the fact that companies offering no win no fee PPI to make the process easier and risk-free, leaves the ball thoroughly in the court of the public, not the banks.
British banks will be counting down the days until the PPI claims deadline is here, but until then, there’s a strong chance that the volume of claims will increase as awareness of the deadline spreads. Despite the fact that banks will be able to relieve themselves of their ongoing debt, it’s safe to say a fair amount of money will be invested into marketing and winning over the public.
Should we expect a similar incident in future?
Now that the trust has been broken and there is less faith in British banks, some people are bound to be paranoid and of the belief that this will happen again. The way in which PPI was mis-sold was a very discreet and underhanded way to take people’s money. No-one can doubt that, but the most vital thing to point out is that the banks did get caught, and were severely punished for it.
With talk of other products such as car finance becoming rumoured as the new wave of mis-selling tactics by banks, it only increases the public’s wariness and makes it harder for banks to get back into their good graces. Whether or not British banks have learnt their lesson is to be seen, but the Financial Conduct Authority (FCA) will definitely be keeping a watchful eye over proceedings before and after the PPI claims deadline.