The Financial Services Authority (FSA) has issued a statement saying it expects 2.75 million complaints about mis-sold PPI between now and 2015. Compensation to customers who have been mis-sold PPI policies is expected to top £4 billion in the next five years.

Could mis-sold PPI become the worst ever personal finance scandal to hit Britain? The current level of complaints and the FSA’s expectations of future complaints, certainly suggest so.

The personal pension mis-selling and endowment mis-selling of the 1990s are currently regarded as the worst personal finance scandals in British history. At the rate complaints about mis-sold PPI are being made, mis-sold PPI could soon surpass personal pension mis-selling and endowment mis-selling to become Britain’s worst personal finance scandal ever. Mis-selling of these products saw the reputations of the providers suffer. Commission driven salesman who mis-sold personal pensions had a hand in damaging the reputations of providers such as Prudential, Abbey Life and Royal & SunAlliance. Prudential was fined £650,000 for these failings while Royal & SunAlliance were fined more than £1.35 million for failing to identify and compensate 13,500 victims.

For endowment mis-selling, Allied Dunbar received the nickname “Allied Crowbar” for the strong-armed sales techniques it used to get borrowers to take out the policies.

Could the reputations of companies who have mis-sold PPI see their reputations damaged in a similar way?

Figures released last month, show the Lloyds Banking Group received 41,874 complaints between January and June this year, just about its insurance products. The majority of the complaints were about payment protection insurance. 36,121 of the complaints were about insurance products sold by the HBOS division of the Lloyds Banking Group, which includes the Halifax, Bank of Scotland and Intelligent Finance brands. 68 per cent of the complaints about HBOS insurance were upheld, suggesting serious problems with the company’s products.

The Lloyds Banking Group has now of course stopped selling payment protection insurance. The decision being put down to increased regulation surrounding the sale of the product.

Increased regulation surround the sale of PPI includes how firms are obliged to deal with customers making complaints about the insurance. Many banks and providers of PPI have been accused of automatically rejecting customers complaints about mis-sold PPI. A record number of customers have complained to their banks about mis-sold PPI this year, between January and June this year, almost 30,000 of these cases were taken to the Financial Ombudsman Service (FOS). The words ‘worst personal finance scandal ever’ ring true further, when 30,000 complaints to the FOS is put into perspective, 30,000 complaints is three times more than the combined totals for mortgages, investments and pensions.

Among the larger providers of PPI, Barclays was the biggest loser when it came to customers complaining to the FOS. Barclays had a staggering 61 per cent of their complaints about mis-sold PPI upheld in favour of the customer. However Barclays were not the worst culprit, some smaller providers were found to be in the wrong almost all of the time.  All complaints against Eisis, 99 per cent of those against Ocean Finance and 90 per cent of those against Black Horse were settled in favour of the public.

In total 81 per cent of the cases taken to the FOS about mis-sold PPI were upheld in favour of the customer between January and June this year.

Mis-sold PPI certainly looks like it will be the worst personal finance scandal ever.