Royal Bank of Scotland
The number of customer complaints regarding The Royal Bank of Scotland increased once more in the 2010. Figures, published by The Financial Ombudsman, show complaints regarding the lender were up 41% in the second half of the year with a total of 53,806 submitted. Of these complaints 8,644 related to the mis-sale of payment protection insurance an increase from 6,469 in the first half of 2010. The figure makes the Royal Bank of Scotland one of the most complained about groups regarding the sale of PPI - second only to The Lloyds Banking Group.
Other figures released by The Ombudsman show that the ten most complained about insurance companies in 2010 were all, in fact, not insurance companies at all, but banks. Lloyds TSB topped this list with The Royal Bank of Scotland coming in fifth overall. The unexpected results have been blamed on the sheer volume of PPI complaints as more customers than ever make Payment Protection Insurance Claims.
Payment Protection Insurance is meant, quite simply, to cover a borrower in the event they cannot keep up repayments on a debt due to sickness or unemployment. PPI has been sold by The Royal Bank of Scotland and most other lenders for many years. It can be sold alongside loan, mortgages and credit cards.
The issue with the cover, though, is it has been widely mis-sold to thousands, if not millions, of customers. It is also extremely expensive and can cost the borrower anywhere from 13-56% of their original loan value. On borrowing of £8,000 this could add an additional £1,040-£4,480. The cost of PPI will also attract interest at the same rate as the loan meaning customers can often end up owing a great deal more than they expected. This often means it takes longer to repay the debt and places the customer under undue financial pressure.
‘Mis-selling’ is a broad term that encompasses many different issues some of the most common are outlined below.
The customer was put under undue pressure or was given information that was incorrect, incomplete or mis-leading
Banks often incentivise staff to sell PPI by offering high rates of commission. In some cases this has led to sales staff to apply unnecessary pressure to customers. Victims of mi-selling often report being made to feel intimidated, guilty or fearful of not taking out the cover. In a 2005 investigation The Citizens Advice Bureau highlighted the problem of high-pressure selling and unfair practices.
In other instances of mis-selling customers are given limited information leaving them unable to make an informed decision as to whether the cover is right for them. For instance, the costs, terms or conditions may not be fully explained.
One of the worst forms of this kind of mis-selling is where customers are told they have to have the insurance cover. Payment protection has always been an optional extra. If you were told PPI was compulsory you have the right to make a complaint.
In order to boost sales many sales staff also misled customers by leading them to believe taking the cover would improve their chance of being given the loan or would guarantee approval.
The customer was ‘recommended’ the cover even though the circumstances make them unsuitable
Like most other forms of insurance, Payment Protection insurance has a high number of exemptions meaning the cover is not suitable for everyone. Unfortunately, because of a lack of training and understanding and because of the lure of commission many lenders recommended the cover to everyone without assessing their individual needs. For example here most policies do not cover people with pre-existing medical conditions or those over the age of 65.
Other groups of people unsuitable for this type of cover are the retired, unemployed, those in full-time education and those who only work part-time. Why would someone require insurance that covers for loss of employment when they are not employed or only working part-time? Payment Protection insurance could clearly be of little or no use to these people and yet it was often ‘recommended’ to them.
If you think you may have been mis-sold a payment protection policy by The Royal Bank of Scotland or any other lender call us on 0207 471 2000.
Remember, you can also claim back unfair bank charges applied to your credit card for late payment or over the limit fees. To find out more contact a member of the claims team today.