12 million to receive letters on PPI scam
Millions of consumers - including "many people in Northern Ireland" will receive letters from lenders telling them they may be victims of the payment protection insurance (PPI) mis-selling scandal.
Between four and 12 million letters will be sent over the next year to customers who may have been mis-sold the insurance but have yet to complain about it, the Financial Services Authority (FSA) has estimated.
The watchdog has published guidance over how the letters should be set out, saying they must be clear and jargon-free.
Under FSA rules, lenders must write to customers in cases where systemic problems with how policies were sold were found, even though they may not have complained. The FSA believes payouts as a result of this proactive letter writing could eclipse the redress paid so far.
In its proposed guidance, the FSA said the letters should be clear, fair and not misleading, and include an explanation that the customer may have suffered financial loss and be entitled to money back. The FSA said firms should ensure the letters are "free from financial jargon or marketing material".
Robert Sinclair, managing partner Robert G Sinclair Solicitors in Northern Ireland explained that many people may not realise they have been a victim of mis-selling.
"This makes all customers of the banks fully aware for the first time for many that they have been mis-sold these policies," he said.
"Many many people in Northern Ireland have been mis-sold policies by the banks but they need to realise these claims have a limited life span and they need to act now."
Martin Wheatley, FSA managing director, said the guidance marks a "key moment in the story of PPI".
He said: "So far the majority of payouts have been for complaints received before, or put on hold during, the judicial review.
"However, we are now beginning to see firms considering how to treat customers who were mis-sold but have not complained.
"We think that the redress due from this process may well exceed what has been paid so far, and that is why we are acting now to clarify our expectations."
Nearly £2bn of compensation payments were made last year to settle claims from the mis-selling of PPI, the FSA said recently.
The FSA said records should be kept of any customer response and action taken.
The watchdog said time limits should also be clearly explained.
The Financial Ombudsman Service recently said it expects to settle a record 130,000 PPI cases this year.
The amount paid in compensation to settle PPI claims last year