Practical tips to help you improve your credit rating and avoid expensive high interest loans
The last couple of years have been a difficult time for the banks. Things like the foreign exchange rigging scandals, and the PPI mis-selling rulings, have shattered the faith of the general public when it comes to personal banking services.
It is only natural that customers find themselves wondering whether they can believe what their banks are telling them.
PPI stands for Payment Protection Insurance. Millions of people in the UK have mis-sold this insurance when they took out loans. In some cases, they were told that the policies they were buying would cover their circumstances even though that was not the case. In other cases, people were told that the PPI was a compulsory part of the loan, which was not the case.
The banks have been forced to pay back mis-sold PPI payments to consumers. In some cases, particularly those who had high-value loans, the PPI was worth thousands of pounds.
For more on PPI, please check out the following link – https://en.wikipedia.org/wiki/Payment_protection_insurance
Please Note – The deadline for claiming PPI has been set for the 29th August 2019. For more on this, please visit – https://www.fca.org.uk/ppi/ppi-explained
Unfortunately, the bad practice from some banks does not end with the mis-selling of PPI. Some banks have made the reclaim process incredibly difficult, and are rejecting a lot of claims. If a consumer has their claim rejected, they have a six-month window during which they can take their claim to the Ombudsman, and there is a good chance that the claim will be reviewed in a positive light.
Given this information, is it fair to say that the banks are lying to their customers? As tempting as it is to call banks “the enemy” the truth is that they are not generally dishonest institutions. The PPI mis-selling was a result not of bad bank policies, but of poorly trained sales advisors in banks operating on a commission basis. The bank staff were not given enough oversight and used pushy sales tactics to try to get consumers to sign up for their PPI policies. This is highly unlikely to happen again now that the issue has been highlighted.
There can be little doubt that ‘shady tactics’ were used previously. In the following article, Which? take a closer look at the ‘Top five PPI mis-selling tactics‘
Bank charges for things like going over your overdraft are another thing that has caused bad publicity for UK banks. A huge number of consumers were hit by high over-limit fees – sometimes fees that would be charged for every day that the bank account was overdrawn. The people who were charged these fees were people who were struggling, and each time they were charged they were plunged further into financial difficulties.
If you believe that you may have been charged unfairly, the following video from Which? Outlines the steps that you should take to submit a claim.
Further information can be found in the following Money Advice Service article – How to reclaim unfair bank charges.
Since the ruling that these charges were excessive was passed, the main banks have been forced to change their fee structure, and this means that consumers are a lot better off this year than they were a few years ago. However, it is becoming increasingly difficult to find basic, fee-free bank accounts, so those with poor credit records and those who are on low incomes have limited access to bank accounts with features such as direct debit. Things are improving, but it will take a long time before the UK’s banking system is fair and accessible to all.
For more on the PPI rulings that have been implemented, please check out the following article on the Financial Ombudsman website – https://www.financial-ombudsman.org.uk/businesses/complaints-deal/ppi