The Financial Services Authority is consulting with firms on how they should deal with potential payment protection insurance mis-selling victims who are yet to complain.
The regulator says firms writing to consumers who may have been mis-sold PPI must do so without using financial jargon.
In a guidance consultation, the FSA says that contacting customers to alert them that they may have been mis-sold a policy is part of the process that firms should be going through if they have identified that the clients have been mis-sold PPI policies.
The guidance says letters being sent to consumers should clearly explain that they may have suffered a financial loss and could be entitled to redress, and that there is a time limit for making a complaint.
Martin Wheatley, managing director of the FSA, says the guidance marks a key point in the PPI mis-selling scandal, as many firms are beginning to think about how to treat customers who have not yet complained for the first time.
He says: “We think that the redress due from this process may exceed what has been paid so far and that is why we are acting now to clarify our expectations.
“By ensuring that firms are clear about the problems they have identified and the potential redress due, we want to prevent consumers running out of time if they choose to complain.”
Customers have six years from a sale to complain, or three years from when they became aware that they had cause for complaint.
The British Bankers’ Association, the Association of Finance Brokers and Which? have welcomed the proposals.
The BBA says its members are committed to ensuring that the letters sent to customers on PPI are consistent, clear and avoid the use of jargon.
Richard Lloyd, executive director of Which?, says: “It’s essential that the regulator’s new guidelines require all financial providers to be clear with consumers about their rights to a claim, the process and the time frames for lodging a complaint.”