Banks should contact customers who were wrongly sold loan coverage known as payment protection insurance and explain how to apply for compensation, the U.K.’s Financial Services Authority said today.
Banks that mis-sold insurance on credit-card and mortgage payments should write to customers to warn them of the deadline for making claims, the London-based FSA said in a statement on its website.
Lloyds Banking Group Plc, Britain’s largest mortgage lender, posted a wider-than-estimated full-year loss last month due to reimbursing customers for improperly-sold payment protection insurance, or PPI. The British Bankers’ Association, an industry group, lost a court challenge last year to stop the regulator from ordering them to pay compensation.
“This is important guidance and marks a key moment in the story of PPI,” Martin Wheatley, the FSA’s managing director for conduct, said in an e-mailed statement. “We are now beginning to see firms considering how to treat customers who were mis-sold but have not complained.”