Lenders to reassess 2.5 million PPI complaints

More than two million claims to be reopened.

Lenders have agreed to reassess 2.5 million PPI complaints which they rejected or paid too little redress to.

The news comes as part of an update from the Financial Conduct Authority on its work on payment protection insurance (PPI) compensation.

The PPI scandal

PPI is a form of insurance which was sold alongside credit products, which was designed to step in and cover your repayments should you fall ill, lose your job, or suffer other circumstances which might mean you could not afford your repayments.

The trouble is that PPI was horrendously mis-sold, with thousands of policies flogged to people who could not possibly hope to successfully make a claim. As a result banks and other lenders who were guilty of pushing dodgy PPI policies have had to hand over a fortune in compensation. An incredible £16 billion in redress payments have been handed over since January 2011.

And it looks like that figure is about to get much bigger.

Compare credit cards with lovemoney.com

Why complaints are being reassessed

During 2012 and 2013, the proportion of upheld complaints about mis-sold PPI fell. The average uphold rate dropped to around 60%, though some firms had significantly lower rates.

The FCA has investigated this and believes that the complainants during this period were not treated fairly.  

As a result it has pushed the firms involved to reassess a whopping 2.5 million PPI claims from the period. These are cases where the complaint was either outright rejected, or where redress was paid but may have been insufficient.

Contacting those yet to complain

Firms will also be contacting more than five million people who are likely to have been mis-sold PPI but are yet to complain. 3.2 million letters have already been sent out, with a further two million to be sent in the coming months.

Read How to claim your PPI compensation.

Compare credit cards with lovemoney.com

More on PPI:

How to claim your PPI compensation

Lloyds Bank uses loophole to short-change PPI claimants

'Serious faults' found with PPI handling 

Millions plagued by 'completely unacceptable' PPI cold calls