Regulator Plans To Put Deadline On PPI Claims

The Financial Conduct Authority (FCA), which regulates the financial system in the UK, has announced that it plans to introduce a deadline for customers to claim refunds for Payment Protection Insurance (PPI).

The organisation says it has decided to consult on a cut-off point for claims, but that any deadline is a long way off.

"The FCA intends to consult on a deadline falling two years from the date the proposed rule comes into force - which, subject to consultation, would not, we anticipate, be before spring 2016 - hence PPI consumers would have until at least spring 2018 to complain," it said.

PPI was a policy sold alongside credit cards, loans and other financial agreements, which covered the borrower if they found themselves unable to keep up with their repayments due to sickness or unemployment.

But it was later found that thousands of people had been mis-sold the insurance, with many unaware that they were even signed up to the policy in the first place.

A ruling made in 2010 by the Financial Ombudsman ordered banks to contact all past PPI customers and invite them to complain, which, if upheld, would mean they would receive a full refund from their bank.

Banks were then forced to set aside almost £30bn to cover the bill.

But, according to the FCA, a large number of customers who intended to complain have not yet done so, with the open-ended window for complaints thought to be contributing to the "consumer inertia".

The statement also says that a "high proportion" of the complaints which have been made so far have gone through claims management companies, which are receiving huge amounts of commission from customer payouts.

To combat this, the FCA had been said to be considering the introduction of a deadline - Sky News reported last week that crunch talks were underway on the possibility - but this is the first confirmation that a cut-off point is in the works.

Banks have also been calling for a deadline on PPI complaints, after Lloyds was forced to earmark more money to cover payouts.

According to the FCA, they will publish a paper setting out their recommendations on a cut-off by the end of this year, which will then be subject to a full consultation with interested parties.

If the FCA chooses to go ahead with a deadline following this process a two-year grace period for consumers to complain will begin, with a publicity drive to let people know about the deadline and encourage them to complain to the banks themselves, rather than going through a claims management company.