Thousands may miss PPI compensation deadline

More than 1.5 million consumers have complained about being mis-sold the controversial cover during the past six years, but banks and other providers have rejected the claims in 60 per cent of cases, and less than a quarter of people went on to complain to the Financial Ombudsman Service (FOS).

Industry rules state that consumers must refer their claim to the FOS within six months of having it rejected by their provider, or they lose the right to complain.

The rules mean that many people who were mis-sold policies may be prevented from getting compensation, even though the industry is expected to pay out between £7bn and £9bn in redress.

The FSA is understood to be considering whether to use new powers to force firms to review previous PPI complaints that have been rejected.