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17 Jul 2019

PPI mis-selling scandal: an insider view

We uncover the shady tactics used to sell PPI, exposing why you should make a claim before the August deadline

Which? spoke to a former business manager who worked for a major UK bank to find out how and why PPI was sold to customers ahead of the PPI claim deadline on 29 August 2019. They chose to remain anonymous.

PPI (payment protection insurance) was sold by all the major banks and other providers, alongside mortgages, credit cards and other unsecured loans since the 1990s, as a product to cover payments on loans if customers fell sick or became unemployed.

Even if you're not sure you were ever mis-sold PPI, you should make a PPI mis-selling claim before the deadline of 29 August 2019.

Insider view: how and why we sold PPI

By the time the bank I worked at stopped selling payment protection insurance (PPI), it was 2010 and I was a business manager, responsible for six banking advisers, and had been in a variety of manager roles and branches for seven to eight years.

When I started working at the bank in the mid-1990s and it was a regular product being sold then.

As staff members, we were encouraged to take out PPI ourselves if we were doing any form of personal borrowing. It was felt at the time that it was a good product and it was presumed you should pay for it without really looking at whether you needed it - especially as an existing staff member.

We were also incentivised to sell PPI, with bonuses paid based on a performance-related system.

In my experience, PPI mis-selling was driven depending on percentage to target - if the target was to close to being achieved and end of the month was approaching, then as a team it would be explored if any staff members were genuinely looking to apply for a new credit card, etc, and whether PPI could be added.

If we didn't meet our targets, we'd face regular discussions and reviews as to why they weren't being met, where we'd focus on what changes could be implemented to improve performance.

Senior management were only concerned that sales targets were achieved and weren't necessarily worried about how these were met. In many cases, if we failed to sell we'd receive no individual or team bonuses.

Everyone wants to do well in their job roles, but this kind of pressure to hit targets could potentially inspire staff to not necessarily do business the right way.

I'm not sure if senior management were aware of branch staff purchasing PPI to help targets, as the mis-selling wasn't prompted by senior management and they would have been overseeing multiple branches, so weren't there for the day-to-day running of the branch. In my opinion, PPI mis-selling was potentially more a branch-related practice. But while PPI mis-selling wasn't actively encouraged by management, it wasn't discouraged either.

The main tactic used to sell PPI to customers was a presumptive sale. What made the sale presumptive was that the terms would be tailored to include the insurance within the customer's budget, instead of offering what should have been an optional insurance as extra.

After speaking to the customer about their budget, the affordability for borrowing would be tailored to include PPI within that.

We'd provide details of the benefits, but not always explore with the customer if PPI was needed based on any existing cover or employer benefits the customer might have already had.

Some advisers may not have discussed exclusions in any great length. The difficulty faced here, is that you trust the people higher up that the products and services offered were ultimately good for the customers.

But without the added PPI, people could have certainly borrowed more and I do feel that maybe some customers may not have fully understood what they were paying for with PPI.

As customers felt grateful or relieved at the time to be approved for the borrowing, sometimes there was potentially not enough reflection time on whether they should pay for insurance as part of their borrowing or not.

Reflecting back, you assume that whatever you're provided with to sell was researched by senior decision-makers and it's the right thing for the customer.

PPI did also do what it's supposed to do for many, and these people were really grateful they had it when times got hard for them. But, the process of checking whether or not people needed PPI probably wasn't robust enough. It's a bit of a Catch-22.

My advice to anyone who isn't sure they have a claim, or to anyone who can't be bothered to make a claim, is that it's definitely worth doing at least the enquiry forms with banks or building societies - especially if you took out a secured or unsecured loan.

How do I check if I have PPI?

PPI would have been added to the amount borrowed, and so would have been part of your monthly loan repayment. It won't be easy for people who were awarded loans to recall if PPI was included.

If you had any kind of credit product, such as a consumer loan, store card, credit card or mortgage up until 2006, when the regulator began imposing fines for PPI mis-selling, you may have been mis-sold PPI (payment protection insurance). Some mis-selling may even have taken place after this date.

So even if you're not sure you were ever mis-sold PPI, you should make a PPI mis-selling claim before the deadline of 29 August 2019.