Mis-sold PPI complaints deadline extended by FSA
Over 50,000 PPI complainants to benefit
By Elliot Wright, 23rd June 2010
Mis-sold payment protection insurance (PPI) victims have been given a boost by the city watchdog after being given extra time to take their complaint to the Financial Ombudsman Service (FOS).
Around 55,000 people who had been mis-sold PPI but saw their initial complaints rejected by firms between 28 November 2009 and 28 April 2009 have been given an extra five months to go to the FOS on top of the usual six month deadline.
The complainants now have until 27 October 2010 to forward their claims to the FOS.
The Financial Services Authority decided to extend the deadline so their forthcoming revamp of the industry's PPI complaints system does not affect potential mis-sold PPI complainants.
Vera Cottrell from consumer group Which? said: "The decision to extend the time limit for referring complaints gives people more time to reconsider their position, and ideally we would like to have this opportunity extended to people who complained some time ago."
The mis-selling of PPI accounted for a massive 30% of the FOS' workload over 2009-10, making it the biggest source of unresolved complaints in the financial services industry.
PPI is designed to protect those who take out loans, mortgages and credit cards by covering repayments should the policyholder suffer an unexpected drop in income, such as through illness or redundancy.
However, thousands of the policies have been mis-sold for various reasons including the borrower being told it was compulsory or part of the agreement, or being misadvised about the costs.
In many cases, borrowers have been sold PPI even though they were not eligible for the cover. For example, they were self-employed at the time or suffered from a pre-existing medical condition.
In September 2009, the FSA decided to crackdown on the widespread practice of PPI mis-selling and ordered firms to reopen complaints they had previously rejected. The regulator estimates there could be over 500,000 such cases.
The regulator has also dished out multi-million pound fines in the past to high-profile firms such as Alliance & Leicester, HFC Bank and Egg.
PPI selling firms have also been told by the FSA to improve the way they deal with complaints and a new set of industry rules may in place by the end of this summer.
In addition, the Competition Commission has decided to press on with its plans to ban the selling of PPI alongside personal loans, mortgages and credit cards at the point of sale.