Payment protection insurance mis-selling was the UK’s biggest financial scandal in history. It had inflicted almost £40 billion in losses for banks because they had to refund consumers for the mis-sold products. Bank employees employed their unscrupulous tactics before the 2008 financial scandal. Thereafter, stricter banking regulation and the use of collective data had been the FCA’s agenda in building its organisation and providing new regulation powers.
The FCA blames the poor structure of the employee incentives system. Because employees face pressure to increase their sales to meet quotas and earn incentives, they have mis-sold products in the process. Even banks did not benefit from such a troublesome event because they had to refund consumers in the process.
Banks are likely to play fair with consumers when it comes to product and service provisions. Despite the increased support for customer service due to the FOS’ efficiency during the entire ordeal, banks will invest in properly structuring its different frameworks to avoid repeating a PPI scenario.
The Financial Conduct Authority will have powerful intervention measures by identifying signals that represent possible immense financial scandals in the future in frameworks. Using big data collected from before, during, and after the PPI scandal, the regulator can foresee possible loopholes and effectively shut down the banks’ frameworks quickly.