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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 12:28

Not sure if you've been mis-sold PPI? Watch out for your letter

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’.

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8 comments so far. Why not have your say?

John Lacy

Mar 06, 2012 at 13:50

There is another side to this-----I arranged redundancy insurance for one of my clients and he actually made a successful claim when he lost his job. You can imagine that I wasn't best pleased when a claims company tried to say it was miss-sold when the client had already benefitted from having his mortgage paid for 4 months.

It makes me suspicious of the genuine scale of this problem when everyone just wants to jump on the band-wagon and shout "miss-sold" on any and every product.

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White Stick follower

Mar 06, 2012 at 14:56

If customers were unaware that they had purchased loan insurance, how will they know that they might have a claim when the offer comes through the post? Given the 6 year rule, many will no longer have documentation I imagine, if the loan has been re-paid. It doesn't affect me because I have never had a loan, apart from my mortgage, which was cleared 11 years ago, and was with Bradford & Bingley anyway. How would anyone claim from B&B in any event, unless that part of its book had been bought by another institution?

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The ssinnic

Mar 06, 2012 at 15:12

What if they've moved house

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long sufferer

Mar 06, 2012 at 15:30

will this extend to credit card insurance? I realise that natwest has been swallowing a percentage of my credit card bills for years!

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Jo Public

Mar 06, 2012 at 19:23

I took out a mortgage from Lloyds in the early 90s. Then, as now, you had to agree to practically ANYTHING to get a morgage at all. I remember heavy pressure to get "endowment" (I wanted "repayment"), which led to that shortfall business - but don't remember insurance as such. This has not prevented loads of unsolicited texts and emails from the sharks trying to persuade me to sue somebody about something (shouldn't THAT be illegal). Are these letters supposed to tell you whether you had the insurance or not?

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Frankie Dee

Mar 06, 2012 at 23:14

The only time these were misold was on store credit cards sales staff got bonuses for selling them i think if someone made a claim then the PPI should not be refunded lets face it you wouldnt sign up ti something if you didnt want it.

I also think that Halifax and RBS have raise mortgage rates to cover this so called mis selling so the rest of us could end up paying the billions.

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Mar 08, 2012 at 09:14

Credit card insurance is definitely one of them.

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Paul Eden

Mar 09, 2012 at 13:38

Where documentation has been lost, is the retailer/company responsible for giving you a new receipt? Or can they charge?

If a compnay states that they never have had PPI, how does one know otherwise?

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