Banks are paying billions for misleading customers

UK financial entities have been fined billions of euros for abusive practices. We spoke to Farhaan Mir, CFO of 11Onze, about the Payment Protection Insurance (PPI) scandal.


The Payment Protection Insurance (PPI) scandal concerned the mis-selling of insurance policies, and it became known as Britain’s costliest consumer scandal. It emerged in the United Kingdom in the early 2000s, when banks and other financial institutions were found to have mis-sold PPI policies to millions of customers, often without their knowledge or consent, opening the floodgates to 60 billion euros of compensation claims.

The insurance policies were intended to cover loan and credit card payments in the event of unemployment, illness, or death, but many customers were sold policies that they were unlikely to be able to claim on, or that duplicated existing insurance coverage. In addition, payments to customers involved commissions in excess of 50%, thus preventing customers from actually benefiting from the policies’ coverages.

What were the main reasons why PPI policies were mis-sold to consumers?

In call centers and high pressure sales environments, people were pushing to get their commissions upfront. That’s the game banks played because the more loans they sold, the more profit they made. When you’re selling an insurance policy, a regulated product, you have to follow a process. In this case, the high profits and the commissions paid to the sales teams, which in some cases were paid three years in advance, were more important than applying the correct process.

How have financial institutions been held accountable for their role in the scandal?

It started with the Financial Ombudsman, when the non-disclosure ended, there was a complaint. As soon as that complaint went in, the banks had to start putting money aside for the penalties they needed to pay. They were aware they could not fight this in court. Basically, they were held accountable in the courts for the amount of PPI they miss-sold, and they’ve been held responsible for the amount of money that needs to be repaid. 

What steps have been taken to ensure that similar mis-selling does not occur in the future?

Firstly, there were penalties for the banks. Second of all, when you buy a regulated product from a financial institution they have to tell you whether you’re eligible, or in other words, that you meet the suitability requirements. Basically, parties selling insurance have to make sure they’re selling you the right product, the right way, otherwise they risk being fined. Also, The Financial Services Authority (FSA) banned sales of single-premium payment protection insurance (PPI) alongside personal loans.

What’s the process of making a claim and how long does it usually take?

You can write to the bank directly and submit the documents yourself, or you can get a private lawyer to do it for you. If you believe you have a valid claim and the bank rejects it, then you can appeal. And if you think the bank is not being fair, you can report the bank to the Financial Ombudsman. So far, these claims are taking from 6 to 8 months.


If you want to find out how to get returns on your savings with a social justice product, 11Onze recommends Litigation Funding.

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  1. Guillem Maura RayoGuillem Maura Rayo says:

    Sembla mentida que aquestes coses puguin passar, tot i ser esclaus dels diners, encara hi ha qui en vil treure més profit, gràcies Onze, per donar-ho a conèixer

  2. Manuel Bullich BuenoManuel Bullich Bueno says:
  3. Carles MarsalCarles Marsal says:

    Mare de déu senyor. Gràcies per l’info.

  4. Jordi MorenoJordi Moreno says:
  5. Joan Santacruz CarlúsJoan Santacruz Carlús says:
  6. alicia Coiduras Charlesalicia Coiduras Charles says:

    Bona informació, Gràcies

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