Finance Monthly January 2020 Edition

28 www.finance-monthly.com FINANCE & BUSINESS - PPI SCANDAL PPI is sold alongside financial products to ensure future payments in case of illness, redundancy, or death, with a total of 64 million PPI policies sold in Britain since 1970. In 2005, it was revealed that a large proportion of those policies were mis- sold, and many consumers were unaware that they had been paying for PPI. Alongside the PPI scandal, one bank has been accused of attempting to reduce compensation pay-outs by cutting professional claims management firms out of communications with customers. The Competition and Markets Authority has also rebuked two major banks for failing to send annual reminders to customers about their PPI policies and their right to claim. It is clear these companies need to fix the cultural issues that led to the scandal and develop a new internal strategy which puts the customer at the heart of their business processes. The deadline to claim PPI compensation has passed. It is now clear just how poorly the financial services industry estimated their losses, with the total cost to British banks from PPI claims exceeding £50bn. This is not an abstract loss or mere balance sheet adjustment – these expenses eat into profits and shareholder returns. Adding to the industry’s frustration is the knowledge this issue could have been identified and prevented many years ago. COULD BANKS HAVE HANDLED THE PPI SCANDAL MORE EFFICIENTLY? www.signavio.com Ian Pollard VP EMEA at Signavio