The Payment Protection Insurance (PPI) saga has rumbled on for some time now. However, with news that banks will be writing to millions of customers informing them they may be liable for a refund, there are definite signs of progression.
The Financial Services Authority (FSA) has ordered that the letters be exempt of economic and banking jargon and must be clear enough to be easily understood by its recipients.
The FSA has deemed this move a ‘major step’ towards rectifying the mis-selling of PPI to a huge number of customers, a large proportion of which do not even know they have been sold the insurance.
Many High Street banks contributed to the paying back of some £1.9 million worth of mis-sold PPI last year alone, and the FSA claims that much more money is likely to be refunded.
The FSA’s managing director Martin Wheatley told the BBC "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".
The FSA has published its set of demands with regard to the letters banks send out as follows:
- that the letter contains important information and should be read carefully;
- that the customer may have been mis-sold;
- the specific failings that led the firm to believe the customer may have been mis-sold;
- that the customer may have suffered a financial loss and could be entitled to redress; and
- that the letter requires careful and immediate consideration and there is a time limit for making a complaint.
Martin Wheatley continued to say that ‘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’.
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