Mis-sold PPI victims to receive letters from banks
FSA sets out new requirements in loan insurance scandal
by Russell Shackleford, 6th March 2012
Banks will be required to send out letters alerting victims of mis-sold PPI that they can claim their money back, after a decision by the Financial Services Authority (FSA).
The financial scandal, which relates to PPI, or Payment Protection Insurance, came to a head last year when a court ruling determined that banks would have to pay out to customers who had been sold inappropriate loan insurance policies, despite the banks' protests.
But there are still a vast number of people who may have been the victims of PPI mis-selling but have not yet claimed, and it is these people whom the FSA hopes to reach by requiring banks to send out letters explaining that they may be able to make a claim.
Payment Protection Insurance is a form of loan cover which is supposed to protect bank customers from defaulting on a loan due to an unforeseen loss of income.
If, for example, a borrower should lose their job unexpectedly, their PPI policy is supposed to pay out and cover their repayments for a set period of time.
However, a culture of PPI mis-selling in high-street banks meant that many people ended up lumbered with worthless policies that they would never be able to claim on due to exemptions and small print that they were not made aware of.
The latest move by the FSA to ensure that people claim their compensation from the banks could mean up to 12 million letters being sent out, and lead to approximately 2 million borrowers forming claims which could mean a total of £3bn in payouts.
The Financial Ombudsman Service, who deal with disputes between banks and customers, are gearing up for a new wave of complaints, and are even planning to recruit a thousand new staff to ensure they are in a position to handle it.
If you have suffered as a result of your banks mis-selling, you could make a PPI claim today.