Banks were always seen as the tools for saving and investing money.

People would go to their respective banks with the hope of earning a handsome interest on their investments and to borrow funds for their needs. Also, the financial products sold by the banks were perceived to be highly beneficial to the buyers.

However, when the Payment Protection Insurance (PPI) scam was exposed, loyal bank customers were in for a shock! It was revealed that majority of the policy was mis-sold by the most trusted commercial banks and card companies in the country.

The banks sold the policy to the customers secretly without letting them know about it. Also, there were banks that only highlighted the positive aspects of buying the policy and deliberately hid the clauses that dealt with the commission to be paid.

As time went by, more people started discovering how manipulative their banks had been to them. This caused a great deal of resentment within the mis-sold customers that still continues even more than a decade after the scandal was exposed.

Big Banks; Big Offenders

Major offenders of the scandal include banks like the Royal Bank of Scotland (RBS), Lloyds, Barclays and HSBC. Out of these banks, the cases of Lloyds and RBS have been some of the most shocking the financial world has seen.

It is often reported by the mis-sold customers that the employees at the Lloyds are trained by their executives to slack in taking on the cases of their customers. Allegedly, the employees would deliberately slow down the process and take much more time than actually required. According to the officials, this would ensure the customers lose hope and gradually forget about the matter.

The banks tried anything to minimise their losses after getting hit hard by the PPI blow. Furthermore, there have been cases of banks asking for a portion of the refund back from the customers after paying them the refund. As customers didn’t know the exact compensation they were supposed to receive, the banks took advantage and tried to claw back as much money as possible.

Though there have been several losses to several banks due to heavy compensations, RBS can be considered as the one that suffered the most. The bank has been in such trouble that the losses amounted to as much as £7 billion in 2015!

Since 2006, RBS has been struggling to make profits. When the bank suffered a loss of £7 billion, it was the ninth consecutive year the bank had gone into losses. The bank owes its loss to the provisions created for several issues that were created by themselves.

RBS has been dealing with a legal issue with the US Department of Justice for a long time, regarding the mis-selling of toxic mortgages. The bank also had to set out a provision especially to deal with a failed attempt of spinning off their Williams and Glyn venture.

The Magical RBS (Almost) Recovery

As the issue prevailed, the bank decided to cut down their costs by £2 billion dollars over the course of 4 years. As the decision was made in 2015, the coming years witnessed a lot of job losses and branch closures. Ross McEwan, the Chief Executive of the bank said in an interview with BBC that the closing of branches and cutting of jobs was inevitable. He further added that their staff and their policies are changing for the good and they hope to recover from their losses soon.

The bank, that is 72% owned by the UK Government, has suffered a total loss of more than £50 billion. The second greatest loss that follows was the one amounting to £45.5 billion which was the taxpayer bailout made during the financial crisis.

Though the bank finally made its first profit in a decade, the penalty to be paid to the US authorities still looms over the bank, overshadowing the profits.

After all this chaos, it’s become difficult for the customers to trust their commercial banks before making an important financial decision. As opposed to earlier times when banks were considered as one of the most trusted financial advisors, it seems that the banks in the UK have lost that reputation with their loyal customers.

What Can Banks Do Now to Regain Their Customers’ Trust?

Though the banks have been working day and night to make sure that their clients get their compensation back, the damage is so huge and the actions have been so manipulative that every customer would now think several times before consulting their bank for financial help.

All the commercial banks and card companies can now do to instil trust in their customers is solve all the mis-selling cases as soon as possible. There are banks that are still slacking in their approach, waiting for the deadline to arrive so they are freed from the burden. But surely trust of their customers is more important than the money they would save.

Some banks are already taking steps to improve their tarnished image. Lloyds, possibly the biggest offender, is reported to give extra dividend to their shareholders out of the profit made in the latest financial year.

This was an important step for their hugely affected shareholders. This step has marked the beginning of the trend the banks that have now started to reap in profits are likely to follow to improve their image.

However, no matter how hard the banks try to compensate for the damage they caused more than a decade ago, the customers would never have full faith in the financial institutions. This doesn't seem to end anytime soon either, as there are still millions of mis-sold buyers waiting for their claims to be passed by the banks and to receive the refund amount on time.

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