The Financial Services Authority (FSA) has issued new guidance to firms which sold customers Payment Protection Insurance (PPI), requiring them to re-investigate potential mis-selling and recompense customers whose claims they have previously rejected.
A number of firms have already agreed to review sales of single premium PPI policies and to compensate customers now identified as having been mis-sold. The new rules will oblige all firms to undertake such a review and should cover an estimated 185,000 cases. Firms will be obliged to review PPI sales since 1 July 2007. If ‘material detriment’ is found they will be expected to go back to January 2005.
Announcing the measures, the FSA points out that: ‘On average, firms have rejected 60% of PPI complaints they have received, but some firms have rejected nearly all. Of the 16% which go on to the FOS, over 80% are overturned in the consumer’s favour.’
A spokesman for the FSA said: ‘It is unacceptable that despite previous warnings about poor sales practices, backed by 22 enforcement cases and significant fines, the PPI sector still needs the FSA to intervene on this.’
Which? has campaigned vigorously on PPI for many years. Head of Campaigns, Louise Hanson welcomed the FSA’s move but called for further action to be taken against recalcitrant firms:
‘While it’s good to see the FSA make firms review cases they’ve wrongly dismissed, we’re concerned about loopholes that could still see some consumers left paying over the odds or with too little compensation, so, we’d like the FSA to monitor the review process closely.
‘The FSA must also take stronger enforcement action against firms with bad complaints handling. It’s not enough to tell them to go back and do better the second time round. Unless big fines are levied, businesses will keep on unfairly dismissing complaints, safe in the knowledge that if they get caught all they’ll have to do is go back and look at them again.’
If you’ve bought PPI and think you might have been mis-sold, you can still complain directly to the firm that sold it to you. For more details and a downloadable template letter see our PPI Campaigns advice.
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