On 6 March 2012, the UK Financial Services Authority (FSA) published guidance on the information which firms must provide when contacting customers who may have been missold payment protection insurance (PPI). The new guidance sets out what the FSA considers a customer contact letter should contain and how it should be presented so that it is clear, fair and not misleading.
As was already provided for by the FSA Handbook, a firm may need to contact all of its PPI customers where, after reviewing its own processes, it has found systemic problems in PPI sales practices. The review of sales practices is left to firms, who must then exercise their judgment to decide whether it would be fair and reasonable to proactively undertake a customer contact exercise.
According to the new guidance, customer contact letters should include the following information:
- That the customer may have been missold a PPI product;
- Specific sales failings that suggest that there may have been misselling by the firm;
- That the customer may have suffered financial detriment and may entitled to redress; and
- That there may be time-limits applicable to a customer making a complaint.
The FSA has also made clear that the explanation given in these letters should not be diluted by other information (such as financial promotions) nor obscured by jargon or legalese.
The FSA’s press release can be found by clicking here.
Background on PPI:
For background information on the history of the PPI inquiry, please see our previous blog posts on this subject.
