The UK’s biggest financial scandal also offers its biggest lesson. It was during the height of the PPI crisis that banks learned many lessons the hard way. Aside from financial institutions, legislative and regulating bodies learned their respective lessons as well. The Financial Conduct Authority surpassed the powers of its predecessor, the FSA, to improve its overview of bank activities and structures.
Abusive banking practices are now met with harsh penalties. However, the “scare” method is not enough to force banks to improve their sales methods and services. The FCA now has power to look into bank systems, especially incentives structures, which help them foresee possible PPI-scale scandals in the near future.
The PPI scandal has indirectly contributed a positive development to Europe’s Insurance Distribution Directive. By enforcing the regulation and laws used in the United Kingdom, the EU ensured banks had no overdrive when it comes to unscrupulous banking tactics.
The Financial Ombudsman Service also proved to all businesses that resolution through mediation is important. Financial sector confidence still remained with the FOS’ efficient resolution of improperly-rejected PPI complaints. However, it had to scale up its operations to meet the increased demand of consumers. In 2012, during the peak of the scandal, the FOS handled up to 5,000 complaints on a weekly basis.