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Not sure if you've been mis-sold PPI? Watch out for your letter
Banks are now starting to send letters to millions of customers who may have been mis-sold PPI to explain how to get compensation.
by Victoria Bischoff on Mar 06, 2012 at 12:28Follow @VBischoff
Millions of people who may have been mis-sold payment protection insurance (PPI) are to now be sent letters explaining how to go about getting their money back.
PPI is supposed to cover the cost of your loan repayments in the event you are unable to pay, but firms have come under fire in recent years for mis-selling the product to millions of people.
The banks have so far paid out nearly £2 billion in compensation to customers who have complained about the way they were sold PPI, and have set aside billions more to pay the claims still rolling in.
However, many people remain unaware that they were ever mis-sold a policy and do not know they are entitled to compensation.
Regulations dictate that PPI firms must now contact all customers who may have been affected by the recent mis-selling scandal and inform them of their right to complain.
The letters must be clear, fair and not mis-leading, the Financial Services Authority (FSA) today warned firms, as well as free from financial-jargon and marketing material.
Firms must make it clear in the letters that:
- the letter contains important information and should be read carefully;
- the customer may have been mis-sold;
- the specific failings that led the firm to believe the customer may have been mis-sold;
- the customer may have suffered a financial loss and could be entitled to redress; and
- the letter requires careful and immediate consideration and there is a time limit for making a complaint.
Normally, customers have six years from a sale to complain or, if later, three years from when they became aware (or ought to have become aware) that they had cause for complaint, the FSA said.
When a complaint is made outside this limit, the firm is no longer obliged to consider it and can reject it – the Financial Ombudsman Service may also dismiss a complaint made outside these time limits.
Martin Wheatley, managing director of the FSA, said today’s guidance marks a ‘key moment in the story of PPI’ and stressed that redress from this process may well exceed what has been paid so far.
However, he warned: ‘Historically, response rates for these types of exercises are low –sometimes as low as one in ten. Therefore, if you receive a letter, it’s important to consider your PPI purchase carefully and if you feel you have been a victim of poor practice –please do respond to the firm'.
Richard Lloyd, executive director of consumer group Which?, meanwhile said: ‘We've seen some really poor examples of communication from banks to their customers’.
More about this:
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- FSA urges firms to contact PPI victims before they complain
- PPI mis-selling: how to get your money back
- Chart of The Day: PPI victims paid £2 billion but owed billions more
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