Citing payment protection insurance (PPI) as an example, Martin Wheatley, managing director of the Financial Services Authority (FSA), has confirmed his aim to end the mis selling by sales incentives.
Announcing his plans after the FSA concluded the most incentivised schemes were the most likely to encourage mis selling, Wheatley described these schemes as “poorly designed” which too often resulted in customers being sold products they do not need or cannot use, while boosting the earnings of the sales person. This proved to be the case in regards to the sale of payment protection insurance.
PPI was mis sold to millions of customers who took out a loan or credit card. Lenders went to extreme measures to sell PPI, from telling the customer the policy was compulsory to implying their application would not be accepted without a PPI policy in place. In many cases, PPI was simply added without the knowledge or consent of the customer.
Mr Wheatley comments on the current mindset of UK lenders:
“Why is it that every time I walk into the bank to do something simple, like pay my credit card bill, the person behind the counter asks me if I would like to extend my credit, take out more insurance or look at their competitive mortgage rates?
“Banks for me used to be a service – a place where you would go in, stand in a queue, have a pleasant chat with the clerk and go about your daily business. Some time ago, this changed – financial institutions have changed their view of consumers from someone to serve to someone to sell to.”