Banks will start writing to millions of customers who may have been mis-sold PPI but not yet claimed.


It seems like the payment protection insurance (PPI) mis-selling scandal has been rumbling on for years, but today the Financial Services Authority issued guidance on what the banks must include in letters they send out to millions of customers. It’s reckoned that the banks could have to pay more compensation from this exercise than they have to people who’ve actively complained.

Who will get a letter?
Banks will send out millions of letters to customers who they believe may have been mis-sold PPI. Banks don’t have to write to everyone who was sold a PPI policy but, under the FSA rules:

– Banks must check how PPI policies were sold in the past.

– Banks must contact customers where they think there’s a chance they’ve been mis-sold.

SAVVY TIP: It was back in August 2010 that the FSA told banks they had to improve the way they handled complaints about PPI; and part of that process would involve contacting people who’d not complained about their PPI policy.

What will the letter say?
The letter will point out that you could have been mis-sold payment protection insurance and will ask you to get in touch. Quite often people who receive these letters don’t respond — either because they think it’s not worth it or because they throw the letters in the bin thinking they’re junk mail.

SAVVY TIP: If you receive a letter it’s really important to contact the bank. People who’ve been mis-sold payment protection insurance are getting hundreds, sometimes even thousands of pounds in compensation. The average amount that people who complain to the free to use Financial Ombudsman Service receive is £2,750 (which is the complaints service you can contact if your bank has rejected your claim).

What if I don’t have the paperwork?
Don’t worry. Although it’s helpful if you have the paperwork from your loan or credit agreement, you don’t need it in order to make a complaint. Banks have pretty good archives and they can check to see whether or not you had a PPI policy. I’d suggest you:

– Contact the bank. Most banks have information on their websites about their PPI complaints departments.

– Give as much information as you can. This should include information about when you took out the loan/credit card and how much it was for and why you think you may have been mis-sold.

– You don’t have to be an existing customer. If you’re no longer a customer of the bank or lender, that doesn’t matter. You still have the right to compensation if you’ve been mis-sold.

SAVVY TIP: If the company that sold you the PPI isn’t trading anymore, you may be able to get compensation from the Financial Services Compensation Scheme. You can read more about How your money is protected in my article in the section ‘Money and retirement’.

How do I know if I’ve been mis-sold?
There are lots of different ways that you may have been mis-sold, for example:

– If you were told you had to have PPI as a condition of the loan or credit

– If you were self employed or on a contract when you took out the policy.

– If you didn’t realise you were sold PPI because it was added to the loan without being explained properly

– If the policy continued after you retired

– If you weren’t told about exclusions on the policy

– If you had medical conditions that you weren’t asked about

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