The British Banking Association yesterday abandoned a legal challenge against compensation over the mis-selling of payment protection insurance. As a result, millions of consumers are to receive payouts of more than £2,000.
Corporate comms specialists warned that the banks now had a difficult road ahead to rebuild already damaged consumer trust in the sector.
Pagefield partner, Sara Price said banks should now ‘apologize, contextualize and clarify.' She added: 'It’s amazing how quickly a sincere apology can diffuse a potentially confrontational situation. This is not about PPI – which is essentially a sound product – it’s about mis-selling.’
More than 3m people are reported to have been sold PPI insurance incorrectly by loan, mortgage and credit card providers. Theoretically PPI should have covered re-payments should the buyer fall ill or become unemployed. However numerous loopholes and small print often meant that in practice this didn’t happen.
Porter Novelli corporate practice leader Neil Bayley commented: 'The decision of the banks not to fight the PPI ruling is a good move. For them to come out with a defensive response now, at a time when trust in banks is so low and most loan customers are feeling the squeeze of the austerity, would be a bad move.
'They now need to look at the decision-making process that took them down this road in the first place, because they could do without being tarnished with terms such as 'mis-selling' in the next few years when they are working hard to rebuild their reputation.'
Edelman Director, Grant Clelland added: ‘In reality, the banks had no choice. Regardless of the actual rights or wrongs of the situation, the perception of the sector as a whole is so low that they simply would not have been able to prolong this process any longer without fuelling public anger against them. But while this step was inevitable, the banking sector as a whole still has a long way to go before it regains public trust.’