The protection specialist claimed that lenders are opening themselves up to future scandal down the line by avoiding the issue of protection.
Alexander Burgess, director at British Money, said: “It appears claims management firms are confident they can secure compensation for borrowers on the basis their lenders failed to act prudently.
“There must be a quality debate now, between all stakeholders on how to tackle the protection gap issues. If left unaddressed, it may cost lenders dearly.”
And Simon Burgess, managing director of British Money, who originally trained as a barrister, explained: “There are multiple legal precedents that outline this duty of care, and where this is breached lenders will be culpable.
“This will be pay-ya vu; there is going to be a second PPI misspelling scandal.”
In March British Money commissioned a survey with 100 claims management companies who predicted the next financial service mis-selling scandal, and 79% said lenders who fail to discuss or offer any form of protection.
Nick Baxter, independent chairman of the Professional Financial Claims Association, agrees the issue needs addressing.
He said: “We seem to have gone full circle. It was not that long ago when the then government had to issue targets to lenders to ensure that debts were adequately protected.
“Then we went through the ‘ridiculous period’ when lenders arranged inappropriate products – often without the customer’s knowledge – and failed to undertake robust needs and circumstances analysis.
“Such behaviours resulted in a number of mis-selling scandals. We’re now back to the pre-government target era when lenders seem afraid to talk to customers about their protection needs.
“Such a situation will be seen by many as equally poor and where customers are left without any ‘safety net’ advice, fingers will again be pointed at lenders for acting irresponsibly.”
