The Royal Bank of Scotland a leading lender in UK has paid over £850 million for PPI compensation in past six months. This compensation was paid to victims who have unnecessarily paid for PPI(http://www.ppiclaims.uk.com/
Reports of nationalized banks released in 2011 has stated that leading financial bodies of UK who were involved in false selling of payment protection insurance policy have set aside millions for compensation. Those who have borrowed loans, mortgage or credit cards in past few years may has mis sold PPI(http://www.ppiclaims.uk.com/
Some banks have made PPI compulsory with any lending financial product but didn’t complete necessary questions related to the plan. This way the policy was sold even to those who were completely ineligible to receive compensation through that. Many agents and lenders have added payment protection insurance plan along with lending financial product without any awareness of borrower.
When people realized these things they start to make claim for such unfair deals. Financial service authority has started judiciary review on the product after getting numerous complaints on the matter. FSA has given its decision in favor of consumers and told that banks have to pay back the amount that belongs to consumers.
Several financial bodies get affected with this decision. FSA has also fined banks for this unfair trading practice. It is not only RBS who affected from FSA decision. Barclays has set aside £1 billion of compensation for PPI complaints.
Financial advisors have commented that banks must have provision to pay back consumer’s amount. Loyalty of consumers towards the bank has left them out of pocket.