FCA finalise plans to place a deadline on PPI complaints

The final deadline for making a new PPI complaint will be 29 August 2019[2]. To encourage consumers to decide whether to act about PPI before the deadline, the FCA will run a two-year consumer communications campaign, which will be launched in August 2017. 

Andrew Bailey, Chief Executive of the FCA said:

“Putting in place a deadline and campaign will mean people who were potentially mis-sold PPI will be prompted to take action rather than put it off. We believe that two years is a reasonable time for consumers to decide whether they wish to make a complaint.

“We have carefully considered the feedback we received and we still believe that introducing a deadline for PPI complaints and a communications campaign warning of the deadline will benefit consumers.”

The FCA has also made final rules and guidance related to how firms should handle complaints in light of the Supreme Court judgment in Plevin v Paragon Personal Finance Ltd (Plevin). The Plevin decision means that consumers may have new grounds to complain about PPI regarding the amount of money that the providers received for the sale if the failure to disclose that commission made the relationship unfair.

As proposed, the FCA’s approach includes a 50% commission ‘tipping point’ at which firms should presume, for handling PPI complaints, that the failure to disclose commission gave rise to an unfair relationship, and that profit share should be included in firms’ calculation of commission. Redress will be calculated as the excess commission over the 50% tipping point.

The FCA will also require all firms to write to previously rejected complainants who are eligible to complain in light of Plevin in order to explain the new basis for complaining to them.

Consumers with live PPI policies will now be able to complain after the deadline if they have a future claim on their policy rejected for reasons related to the sale. The complaint must be related to the reason the claim was rejected, for example, eligibility, exclusions or limitations.

Complaints about PPI policies sold after 29 August 2017 are not subject to the deadline.

To give firms more time to prepare to implement our approach, and the FCA more time to supervise their preparations, the rules surrounding Plevin will come into effect at the same time as the deadline rule – not three months before as originally planned.

What should consumers do?

Consumers who are unhappy about PPI should continue to complain to the firms concerned and to the Financial Ombudsman Service if they are not satisfied with the response. Consumers have until 29 August 2019 at the latest to make their complaint, but some consumers, including those who have previously been told by their firm that they may have been mis-sold, may run out of time sooner.

Making a complaint is free to consumers and most people should not need to use a claims management company to assist them. Consumers who intend to complain about PPI should do so as soon as possible. Further information for consumers is available on the FCA website[3].

Notes to editor

1. Profit share refers to an amount that was paid under arrangements to receive back part of the PPI premium that had initially gone to the insurer, for example, to cover potential claims, but which remained unspent, for example, because actual claims did not exceed certain levels.
2. The complaints handling rules already set time limits for consumers to make complaints about financial products. These time limits are generally six years from the event the consumer is complaining about or, if later, three years from when the consumer knew, or could reasonably have known, they had cause to complain. In the case of PPI, because many consumers did not know they had been mis-sold PPI, these time limits may not yet be triggered. However, consumers who have previously been informed of this by their firm (for example, through a letter) may be out of time earlier than 29 August 2019. Some consumers who have made a claim, or attempted to make a claim, on their PPI may also be out of time earlier, although this will depend on the facts of the case.
3. PS17/3, 2 March 2017: Payment protection insurance complaints: feedback on CP16/20 and final rules and guidance[2].
4. FCA statement, 9 December 2016: FCA statement on PPI[4].
5. CP16/20, 2 August 2016: Rules and guidance on payment protection insurance complaints: feedback on CP15/39 and further consultation[5] (PDF).
6. CP15/39, 26 November 2015: Rules and guidance on payment protection insurance complaints[6].
7. FCA statement, 2 October 2015: The Financial Conduct Authority’s Statement on payment protection insurance (PPI)[7].
8. FCA statement, 27 May 2015: Statement on Plevin v Paragon Personal Finance Ltd[8].
9. FCA statement, 30 January 2015: The Financial Conduct Authority to gather evidence on how the PPI complaints process is working[9].
10. Supreme Court Judgment: Plevin v Paragon Personal Finance Ltd, November 2014.[10] The court ruled that a failure by a lender to disclose to a borrower at point of sale the large commissions payable out of the PPI premium made the relationship between the lender and the borrower unfair under section 140A of the Consumer Credit Act 1974.
11. Monthly PPI refunds and compensation statistics[11].
12. PPI was sold to borrowers alongside credit products. It was meant to help repay some or all of their borrowing if they lost their income for a period (if, for example, they had an accident, became unemployed or sick, or died). The most commonly sold types of PPI were single premium policies on unsecured loans (around 48% of all PPI policies sold), credit card PPI (around 36%), and regular premium policies on loans or mortgages (around 15%).
13. Find out how to claim back money on the sale of PPI[12].

Information on the FCA

1. Find out more information about the FCA[13].
2. On 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
3. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.