The FSA has released new guidance for firms to follow when writing to customers who have been sold payment protection insurance (PPI).
New guidance has been issued by the FSA which outlines the process firms should follow when writing to customers who have been sold payment protection insurance (PPI).
The guidelines emphasise that firms need to be clear about why a PPI policy may have been mis-sold, why the customer could be entitled to compensation, how they should make a claim and the timescales involved in doing so.
The FSA are contacting customers who may have been mis-sold a PPI policy but have not yet complained. Since 2001 nearly £34bn worth of policies have been sold and in 2011 the total redress paid by firms was £1.9bn.
From the time a sale is made customers have six years in which to make a claim, or three years from the date they became aware that they had cause to complain. If a complaint is made outside these time limits, the firm no longer has any obligation to consider it and the Financial Ombudsman Service is also entitled to dismiss such a claim.
Martin Wheatley, managing director of the FSA, has stated: “This is important guidance and marks a key moment in the story of PPI. So far the majority of payouts have been for complaints received before, or put on hold during, the judicial review. However, we are now beginning to see firms considering how to treat customers who were mis-sold but have not complained.
“We think that the redress due from this process may well exceed what has been paid so far, and that is why we are acting now to clarify our expectations. By ensuring that firms are clear about the problems they have identified and the potential redress due, we are aiming to prevent people running out of time if they choose to complain.”