Banks to notify customers who were mis-sold PPI
FSA demands that letters be sent out
by Russell Shackleford, 6th March 2012
High street banks who mis-sold PPI to unsuspecting borrowers have been told by the Financial Services Authority (FSA) that they must send out letters informing them that they could make a claim.
12 million borrowers could be contacted in the new initiative from the FSA, which is expected to lead to the opening of as many as 2 million new Payment Protection Insurance (PPI) claims - which would cost the banks approximately £3 billion in additional compensation.
Financial institutions have already paid out billions of pounds to customers who were mis-sold policies, and yet there are still more who are able to make a claim but are not aware of it or have not done so for other reasons.
Mis-selling occurs when an individual is encouraged to pay for a financial product which does not fit their needs and may therefore be useless to them. This can occur with any type of product, but the sheer scale of PPI mis-selling was shockingly vast and led to scandal when the story initially broke.
PPI was intended to protect those who took out a loan from their bank, and was supposed to protect their ability to keep up the repayments, even if they should suffer an unexpected loss of income for whatever reason.
However, a large percentage of the people who were pushed to take out PPI policies by lenders would never have been able to make a claim, meaning that they often ended up paying pricey insurance premiums for a service which was of no use to them.
It is for this reason that the FSA is pushing the banks to ensure that victims of PPI mis-selling receive the redress they are owed.
The Financial Ombudsman Service, who are responsible for ensuring fairness in the banks' dealings with their customers, are to recruit a thousand extra employees to help deal with the disputes they expect to arise once the new claims begin.
If you have been sold Payment Protection Insurance you didn't need, why not claim back PPI today?