FCA Proposes Deadline For Making PPI Claims

The Financial Conduct Authority (FCA) has said it intends to impose a deadline for consumers to make claims if they were mis-sold Payment Protection Insurance (PPI).

The city regulator is also planning to launch a consumer communications campaign to raise awareness of the PPI issue and deadline, which comes as the FCA creates new rules and guidance on the handling of PPI complaints.

"Putting a deadline on PPI complaints will bring the issue to an orderly conclusion in a way that protects both consumers and market integrity," said Andrew Bailey, chief executive of the FCA.

"We have listened to all the feedback we have received and believe that the steps we are taking are the right ones.

"We will ensure that our communications campaign will engage with all those who could be affected, particularly vulnerable consumers."

A period of consultation and feedback on the proposed changes will close on 11 October.

If the FCA decides to proceed with the proposals, it is anticipated that the rule setting the PPI complaints deadline would come into force by the end of June 2017, with the consumer communications campaign starting at the same time.

All claims would then have to have been made by consumers, two years after this date, by June 2019.

This is an extension of its original proposal of spring 2018 as a cut-off for claims.

The new deadline is set to escalate the total bill for the PPI scandal, which has already cost the financial services industry well over £30bn.

Experts are warning this extension could see banks set aside hundreds of millions of pounds more to cover claims.

One of the worst affected Lloyds Banking Group (Other OTC: LLOBF - news) , said it was "disappointed" by the announcement, but its rate of complaints were falling.

Lloyds has put by £16bn so far since 2011 to cover PPI claims and still has £2bn in unused provisions.

In the meantime, the regulator is advising people who are unhappy about PPI to complain to the firms concerned and to the Financial Ombudsman Service (FOS) if they are not satisfied with the response.

PPI was sold to thousands of borrowers alongside credit products. Recent figures from the FOS reveal that 4,000 new complaints are made every week.

It was meant to help repay some or all of their borrowing if they lost their income for a period in the event of an accident, become sick or unemployed.

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%).