UK Banks Forced to Pay £38 Billion for PPI Mis-selling — Largest Consumer Scandal in UK History

The Payment Protection Insurance (PPI) scandal is the largest consumer mis-selling scandal in UK financial history. Over two decades, UK banks and financial institutions sold PPI policies alongside mortgages, credit cards, and personal loans. PPI was supposed to cover repayments if the borrower became ill, lost their job, or had an accident.

However, the policies were routinely mis-sold on a massive scale:

- **Sold to people who couldn't claim:** PPI was sold to self-employed workers, retirees, and people with pre-existing health conditions who would never be eligible to make a claim. - **Added without consent:** Many customers didn't even know PPI had been added to their loan or credit card. - **Pressure sales:** Bank staff were incentivized to sell PPI with every loan product and pressured customers into purchasing it, sometimes implying it was mandatory. - **Excessive commissions:** Commissions of 50-90% of the premium were common, meaning most of the money customers paid went to the bank, not toward insurance coverage.

When the scandal was exposed, the Financial Conduct Authority (FCA) required banks to contact all customers who might have been mis-sold PPI. The Financial Ombudsman Service (FOS) was overwhelmed with complaints — at its peak, PPI complaints accounted for over 75% of all complaints received.

The deadline for PPI claims was set as August 29, 2019, after a massive public awareness campaign. By the time it closed, banks had paid out approximately £38 billion in compensation — the largest consumer redress exercise in UK history.