FCA plans 2018 deadline for PPI claims

The FCA is consulting on the introduction of a deadline by which consumers would need to make their PPI complaints or else lose their right to have them assessed by firms or by the Financial Ombudsman Service.

Related topics:  Finance News
Rozi Jones
2nd October 2015
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The deadline would fall two years from the date the proposed rule comes into force, which is expected to be spring 2016 – meaning PPI consumers would have until spring 2018 to complain.

The current rules and guidance about PPI complaint handling have been in place since December 2010. Over £20 billion redress has been paid to over 10m consumers so far.

FCA research has found a high and growing proportion of complaints are made via claims management companies, with fee costs to the consumers who use them.

A large number of complaints also relate to older sales (pre-2005 and even pre-2000), where the documentary evidence held by firms and consumers is likely to have significant gaps and recollections and oral evidence are becoming increasingly stale.

Additionally, a significant proportion of complaints made turn out not to have involved a PPI sale, and a number of those consumers who told us they intended to complain, also said that they had not yet got around to doing so.

The FCA believe that the open-ended nature of the complaints-led approach appears to contribute to this consumer inertia - i.e. it does not incentivise consumers to check whether they had or have PPI or progress complaints in a timely fashion. It therefore believes that there is a case for intervening further in PPI and that introducing a deadline and running a communications campaign would prompt many consumers who want to complain, but have not yet done so, into action.

It also wants to bring the PPI issue to an orderly conclusion, reducing uncertainty for firms about long-term PPI liabilities and helping rebuild public trust in the retail financial sector.

The FCA considers that such an intervention may encourage more consumers to complain directly to the firms, rather than using and paying claims management companies.

The FCA has also decided to consult on rules and guidance about how firms should handle PPI complaints fairly in light of the Plevin judgment concerning a claim about the non-disclosure by a lender of the level of commission on a PPI contract. The proposed deadline would also apply to the handling of these complaints.

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