Back in September the City regulator with some fanfare announced “tough” new measures which would have provided comfort to any consumer mis-sold a payment protection insurance policy in the past five years.
By the end of the year, the FSA wants to have in place a new rule which would force banks and other PPI providers to review some 185,000 complaints rejected since January 2005 – a costly move for the industry.
But the FSA reckons the new rule is needed because current guidance hasn’t stopped some providers from rejecting nearly all PPI complaints, most of which are being later overturned by the Ombudsman in the consumer’s favour.
Most problems with PPI are about mis-selling: either consumers can’t claim on the policy due to exclusions, or they weren’t told it was to be bundled into their loan with interest charged on the compounded amount. Others were not told about the monthly and annual cost of the insurance.
Anyone getting redress would be entitled to a refund on their premiums plus interest paid due to that component, which could amount to hundreds, if not, thousands of pounds for some.
The FSA’s proposals should ensure complaints are fairly considered in future and not rejected out of hand. But if you are a customer hoping the FSA’s plans will result in your rejected complaint being given a better hearing second time round, you may have to wait a while longer to see action.
The industry is making strong representations for this retrospective element to be pulled as you can read in our exclusive report.
Swinton fined for PPI breaches, (FT, October 28, 2009)
Watchdog acts over mis-sold insurance (FT, 30 September, 2009)