How Have the Major Banks Reacted to the PPI Scandal?

by John Burton on March 28, 2012

The shame of PPI mis-selling just won’t seem to go away at the moment. There are still hundreds of thousands of people that haven’t got compensation from banks, and there are billions of pounds waiting to be collected. Despite FSA orders to directly contact people who may have been the victims of PPI mis-selling and inform them of their right to claim, it still seems as if the banks will get to keep some of their ill-gotten money once the deadline for claims passes.

The reason the banks are being treated so harshly is because they were part of a huge effort to mislead customers into handing over money for a poor form of insurance cover. The cover itself should work to stop you from being in trouble with mortgage repayments if you become suddenly ill, or have an accident that prevents you from working. But in effect the cover was useless for a third of the people that took it out. It was routinely forced upon customers in order to secure a mortgage, overcharged, and given to people that weren’t even eligible for the cover, such as the unemployed.

Unsurprisingly, the government response when this was discovered was severe. Alliance and Leister was the first bank to be fined, with an order for 7 million as punishment for mis-selling insurance. From that, Alliance and Leister went along with compensation claims without resistance, as did all of the other banks owned by Santander. But not all banks were so amiable.

Sadly Lloyds, The Bank of Scotland, and Barclays weren’t as keen to co-operate. It’s hardly surprising considering a third of the profits from PPIs went into Lloyds pockets, and almost a quarter into The Bank of Scotland. But despite digging their heels in they have been forced to agree to the terms of repayment too, with heavy fines being threatened if they’re not quick about it.

Despite over six years of people fighting for their money back there’s still an awful lot to repay, so make sure you weren’t a victim too.

Make a Santander PPI claims if you have had a mortgage with them or Abbey National.

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