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Archive for tag: PPI Storm

PPI is more than a ‘storm-in-a-tea-cup’

When the mis-selling scandal broke, many people thought that the mis-sale of payment protection insurance (PPI) would be nothing more than a skirmish. But, it has grown into a gargantuan thorn in the side of British banks and lenders.

So much so, that many banks are now hoping that the proposed deadline of 2018 becomes a reality. Their compensation bills seem to running ever higher and now it seems there may be some more bad news on the horizon for the banks.

Undisclosed Commission

A few months ago, Santander paid a generous £25,000 compensation cheque to a customer who had taken out a store card in 1989. The card was for Debenhams and the card facility was provided by GE Capital Bank.

Santander bought the bank in 2009 and when a customer submitted a claim to Santander via a claim management company, they refuted her claim saying that they did not agree that she had been mis-sold the policy.

Undeterred, the claim management company stuck to their guns and also indicated to Santander that the customer, at the time had not been made aware of the commission involved in the sale of the card. This, argued the claim management company, was unfair and thus, they believed their client was entitled to compensation.

Surprisingly, the bank agreed, contacting the customer with a settlement offer of just under £25,000. This is thought to be the first time that a bank has accepted fresh grounds for a PPI complaint.

But why the change of heart? Santander themselves have refused to comment on why in the first instance, they refuted and refused the customer's claim for compensation, only to settle when they made a second claim.

But it may be something that happens again. GE Capital Bank was itself fined a whopping £600,000 in 2008 for the mis-selling of PPI. At the time, this was the biggest fine but has now been passed by fines levied against Lloyds Banking Group.

Could the key to this change of heart be 'undisclosed commission'?

Many financial experts suggest that the issue of commission payments will dog PPI claims and banks in the coming year. Many believe this was the root of the change of heart, coupled with the fact that GE Capital Bank has faced fines for wrong doing in the past relating to PPI.

The proposed 2018 deadline, if it is confirmed in spring 2016, cannot come soon enough for the banks who have seen their profits trickling from their grasp. The time to check your store and credit cards is now - have you been mis-sold PPI?