The FSA today ordered firms reopen about 185,000 previously-rejected payment protection insurance (PPI) complaints and reassess them.
It hopes the move will tackle what it calls the "key issue" that too many complaints are rejected by firms and then overturned by the financial ombudsman (FOS).
It says firms representing more than 40% of face-to-face sales in the single premium unsecured personal loan PPI market have agreed to review their sales and redress those consumers identified as missold.
FSA research found, on average, firms reject around 60% of the PPI complaints they receive, but some firms reject nearly all of them. But of those complaints that reach the FOS, more than 80% are overturned in the consumer's favour.
Additionally, the FSA says it is launching a "targeted" assessment of sales practices for PPI on secured loans and credit cards. It says if the potential for misselling is identified, pro-active reviews by firms may be extended to these areas too.
"It is unacceptable that, despite previous warnings about poor sales practices, backed by 22 enforcement cases and significant fines, the PPI sector still needs the FSA to intervene on this," FSA managing director of retail markets Jon Pain says.
"The outcome of a complaint about a PPI sale should not depend on whether or not the complainant persists past the firm on to the FOS. This is the last chance for the industry to show that it can act fairly, consistently and in the best interest of consumers on PPI."
The FSA has previously taken action against 22 firms over poor PPI sales practices, including handing out its largest-ever fine in the retail sector to Alliance & Leicester, which was fined £7m in October 2008 for serious failings in its telephone PPI sales.
In February, the regulator sent a ‘Dear CEO' letter to the chief executives of firms selling single premium PPI with unsecured personal loans, requesting they stop selling the products by 29 May this year. It says, to the best of its knowledge, the product is no longer being sold.
