Up to 150,000 rejected PPI claimants to receive letters saying they can complain again

Last year, the Financial Conduct Authority (FCA) began consulting on new guidance on how firms should decide if a customer with payment protection insurance (PPI) has been treated unfairly, and it has now given clarification that means more customers can try to reclaim.

MoneySavingExpert.com has welcomed the FCA's announcement, as we campaigned for some of these PPI customers to be written to about the update to ensure they would know they can now try to claim again.

What are the rules about PPI commission?

PPI is designed to cover your loan or credit card repayments for a year in the event of an accident, sickness or, in some cases, unemployment.

In itself, it's not a bad product. But it's been widely mis-sold and now, because of 2017's ruling called Plevin, even just having had it means you're likely due some cash back.

In 2014, a court ruling held that customer Susan Plevin was treated unfairly because she wasn't told about the large amount of commission (71.8%) taken from her PPI payment – so this can be used as a new reason to claim for compensation.

The FCA's Plevin rules mean that if more than 50% of your PPI's cost went as commission to the lender, and that wasn't explained to you, you are due back the extra above that – if your PPI was still active at some point since 2008.

The average commission banks were paid was 67%, meaning millions more people who were sold PPI are now entitled to money back. It's worth noting that a county court has awarded a higher payment than the FCA's above 50% threshold. See our Judge rules couple can reclaim all of their PPI commission MSE News story for more.

Who can claim under the new rules?

Firms have been told by the FCA to write to the following PPI customers who bought their products before 6 April 2007 and previously had complaints rejected:

• Around 10,000 PPI customers who weren't reminded about the cost of commission. They were originally told they couldn't claim on the basis that the initial commission on their policy was too high, but the FCA has said they can now try to claim again due to the fact they weren't reminded about the cost of the commission throughout their policy (even if they were told about it at the point of sale).

• Up to 140,000 PPI customers who couldn't claim for mis-selling but CAN claim for Plevin. The FCA estimates between 60,000 and 140,000 customers will need to be contacted to let them know they can claim under Plevin rules. They have had complaints rejected previously, but were not assessed for undisclosed commission and didn't receive a letter about being able to claim for undisclosed commission previously, when others did. The firms will now write to these people to say they can make a new complaint now about undisclosed commission, either at the point of sale and/or about it recurring throughout their policy.

If I get a letter, what should I do?

If you do get a letter about having another opportunity to claim for mis-sold PPI, don't worry if the details seem very complex.

The FCA says you don't actually even need to know whether you are complaining about commission that you weren't told about at the point of sale, or about commission you paid throughout your policy. 

If you get a letter from the firm that supplied your PPI, you just need to make clear when you complain that you are claiming in response to the letter.

You can find out more about how to claim in our Reclaim PPI for free guide.

Remember that the final deadline for claiming is 29 August 2019, but you may want to claim before then to avoid getting caught in any last minute glut.