Banks and credit card companies must reopen more than 2.5 million payment protection insurance compensation cases to make sure they have paid customers enough cash for misselling them worthless cover.
The Financial Conduct Authority has accused the banks and credit card companies of short-changing customers seeking compensation.
The regulator says too many claims were unfairly rejected or paid too little to settle their complaints.
Martin Wheatley, chief executive officer, at the FCA, said: “These financial institutions have to rebuild the trust of their customers and making sure anyone who was unfairly treated is compensated properly is important.
“We think this has not happened in around 2.5 million cases and we have told them to reopen the files and look at the complaints again.”
The PPI misselling scandal has rumbled on for three years.
Compensation billions
In that time, banks and credit companies have dealt with 13 million claims and paid out £16 billion in compensation.
In more than 70% of cases, the customer complaint has been upheld.
More than 3 million letters have been sent to customers who have not complained but may have a case and another 2 million are ready for the post.
The FCA intervened in the complaints process due to falling uphold rates – some banks and credit companies were paying out in less than 60% of cases and some even less.
Wheatley explained he expected more complaints and that the PPI redress process would not end for at least another year.
“We have learned lessons from this which we will apply to other redress cases,” he said.
“Banks have already paid £1.2 billion over interest rate hedging products, and we are looking at missold card protection and identity theft insurance misselling as well.”
Warnings about bogus advisers
Dealing with an unregulated firm
If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.
Checking if a firm is regulated
Go to the Financial Services Register to check if a firm is regulated in the UK.
Reporting a suspected bogus adviser
Find out how to report unauthorised advisers on the FCA web site
