The guidance consultation, published today, said customers who may have been mis-sold to but have not yet complained must be contacted by the firm which sold them their policy.
Letters sent to these customers must explain clearly that they include important information and should be read carefully and that the customer may have been mis-sold to, the guidance said.
Letter must also include details of the specific failings that led to the firm’s mis-selling, and tell the customer that they may be entitled to redress.
The letters must also make clear that there is a time limit for making a complaint. In this case, the time limit is six years or, if later, three years from when the consumer became aware or should have become aware of their grievance.
Communications of this kind are part of the root cause analysis the FSA has ordered firms which sold PPI to undertake.
Root cause analysis requires firms to identify systemic problems in its sales processes, contact affected customers, and correct the problems.
Martin Wheatley, FSA managing director, said: “So far the majority of payouts have been for complaints received before, or put on hold during, the judicial review.
“However, we are now beginning to see firms considering how to treat customers who were mis-sold but have not complained.
“We think that the redress due from this process may well exceed what has been paid so far, and that is why we are acting now to clarify our expectations.
“Historically, response rates for these types of exercises are low – sometimes as low as one in ten.”
Wheatley added the British Bankers’ Association and the Association of Finance Brokers both support the guidance.
