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PPI Scandal Aftermath

Lessons Not Learnt

The wake of PPI scandals over the last decade have been followed by legal uproar, ground-breaking court cases and decisions that allowed for millions of customers to claim back money they were rightfully owed. David had fought the Goliath lender, by dragging him through the legal system and won; or so it seemed.

It has recently come to light lenders are continuing to fall short on their responsibility of care when it comes to payment protection policies. Lenders have failed to comply with regulations put in place by the Competition and Markets Authority: PPI Order.  

What is the PPI Order?

The Competition and Markets Authority PPI Order was designed to remedy the adverse effects on competition after the CMA’s inquiry into the sale of PPI in the UK. 

The order obliges providers to give customers information about their PPI: providing an annual review about the PPI policies they are paying for, how much they are paying, and a reminder that they are entitled to cancel at any time.

Annual Reviews, the CMA stated, are intended to help customers compare the cost of PPI with other policy providers. Failure to provide accurate figures reduces their ability to make an accurate comparison.

This seems like a reassuring step in the aftermath of both the mis-selling and Plevin scandals, putting this review in place helps to repair any distrust caused by previous incidents. 

Further Failures

Earlier this year, it was listed that Lloyds Bank had breached this order, affecting over 28,000 customers relating to the failings around provision of annual reviews. The Bank sent incorrect information in their customers’ annual reminders – including monthly amounts displayed in the wrong sections and incorrect figures given. Lloyds have since refunded £957,000 for these breaches. 

In September, the CMA wrote publicly to Lloyds to detail their wrongdoings and ensure they contact customers affected with an apology and offer a refund of premiums with 8% interest. The CMA are now monitoring how Lloyds handle the annual reviews further. 

Adam Land, Senior Director of Remedies, Business and Financial analysis in the CMA, stated: “It’s a real concern that PPI providers are still breaking the rules by sending inaccurate PPI reminders despite a clear, well-established Order from the CMA. These failures can mean people end up paying for insurance they no longer need – It’s important that all PPI providers take notice – we will continue to act if providers carry on breaking the rules.”

Having been put in place to help re-build trust it has sadly shown again that, where PPI is concerned, lenders still refuse to follow the rules that put their customers’ best interest at the forefront.

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