What tobacco companies need to learn about mis-selling insurance
Selling consumers payment protection insurance they don’t need and can’t claim against is coming to roost
The bill for the UK’s payment protection insurance (PPI) scandal has climbed past £50bn, making it one of the world’s worst consumer mis-selling scandals of all time. This week, Lloyds Banking Group became the latest UK lender to report an unexpectedly large flurry of compensation demands ahead of last month’s final deadline. The bank suspended its share buyback programme and warned that it would have to pay up to £1.8bn on top of the more than £20bn it has already set aside.
The scandal involved signing mortgage and credit card customers up for largely useless insurance they often did not know about and could not claim on. Complaints surfaced in consumer magazine Which? as early as 1998, and the UK financial regulator first warned of poor sales practices in 2005.