Customers who were mis-sold payment protection insurance (PPI) may miss out on compensation if they fail to get their complaint in on time. Over 1.5 million people over the past 6 years have lodged complaints about being mis-sold the controversial policies, yet 60 per cent of these cases have been rejected by banks and policy providers. Of these 60% of unsatisfied consumers, only around a quarter went on to take their issues to the Financial Ombudsman Service (FOS). 
The industry rules now state that customers must refer to the FOS within 6 months of the provider rejecting their claims. If they fail to do this then they lose their right to any further complaints. This means that many consumers will lose out on any compensation as a bank or firm can reject the claim and the responsibility is on the complainant to make the referral within the time frame.
The Financial Services Authority is looking at whether or not to use new powers to force policy providers to review customers’ PPI complaints that had previously been rejected.
Another possibility for clients to pursue their compensations claims is a new rule that forces firms to proactively contact their customers to tell them they are entitled to have their policies looked at if they feel they have been mis-sold to them. People in possession of such a letter may be able to reissue their original claim with the ombudsman even though it may have already been rejected by the provider
The industry is forecast to pay out between £7 billion and £10 billion in compensation after a legal battle on the new rules about mis-selling was abandoned.
The Financial Ombudsman Service has complained on numerous occasions that banks and other providers were not handling the Payment Protection Insurance complaints fairly, and would often reject them without a full investigation knowing that most consumers would not take the matter any further. The ombudsman has found that in two thirds of cases of mis-selling policies, the consumer had a right to compensation, and for some financial firms the figure rises to 100% of claimants.
However, it’s likely that these compensation payments will hit customers in other ways as the banks and financial firms look to recover the cost. Mortgages and other loan fees could rise, savings rates cut or account charges be levied for free current account holders.
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