PPI claim deadline is looming - but damage to banks from the scandal is far from over
Research Fellow, Professor Jillian Farquhar, with Associate Professor, Julie Robson of Bournemouth University, explores how customer trust in banks has been damaged in the wake of the PPI mis-selling scandal.
Borrowing money can be a risky business. So, in theory, payment protection insurance (PPI) sounds like a sensible precaution to take – a financial safety net in case loan repayments suddenly become difficult to make because of redundancy or illness.
But charging customers to insure their own borrowing has ended up costing British banks a fortune in compensation, because of the way PPI was sold – or rather mis-sold – to customers. It has also cost them dearly in terms of trust.
Some banks (and other credit providers) told customers that PPI was compulsory, or added it to products without the customer’s knowledge. In some cases, it was sold to customers who were not eligible to claim, like the self-employed.