Consultation launched on 2018 PPI reclaim deadline

The FCA document also sets out proposals to clarify how complaints about undisclosed PPI commission should be handled in the wake of the Plevin v Paragon Personal Finance Ltd Supreme Court case.

The court ruling held that Susan Plevin was treated unfairly because she wasn't told about the large amount of commission (71.8%) taken from her PPI payment. The FCA document says firms should generally consider a complaint on the grounds of an unfair relationship between lender and borrower if commission was above 50%.

The time-bar for PPI claims was first announced in October, when the FCA said it would consult on introducing a deadline – a move branded "anti-consumer" by MoneySavingExpert.com founder Martin Lewis.

We'll be submitting a full response before the consultation closes on 26 February 2016. But here's Martin's initial response and a summary of key points from the consultation paper.

'It's a done deal'

Martin says: "This is not a consultation in the true sense. We know it's a done deal that the FCA is going to put a time-bar on PPI reclaiming, so all it's really asking for is suggestions of how it tweaks its implementation.  

"Yet that doesn't stop the fact that we are very disappointed the FCA has chosen to put a hold on PPI reclaiming even after many warnings of the danger. How can it argue this is being done to protect consumers when the uphold rate at the Financial Ombudsman is still over 70%?

"To go to the Ombudsman you have to first complain to the bank, so it's likely banks are still wrongly rejecting claims from over half of those who have been mis-sold.

"The time limit itself is at least a longish one, although we think it should be longer, and the FCA is choosing to do a widespread communication piece. Yet it must solve the problem of how banks deal with complaints, and ensure people aren't wrongly rejected, then ruled out.

"The urgent clarion-call to consumers is if you've had a loan, credit card or mortgage in the last 10 years you should be checking now whether you had PPI on it and if so, was it mis-sold? Many people are shocked they had PPI when they didn't think so, as one way it was mis-sold was it was added even though they said no.

"Plus if you have already made a past PPI complaint that was rejected by the bank but you did not go to the Ombudsman, you should restart your complaint now. Banks have been fined for poor complaints handling – your bank rejection does not mean you weren't mis-sold."

Anyone who's had a loan, credit card, mortgage, car finance or other credit agreement in the past 10 years should check NOW if they can claim. See our PPI Reclaiming guide for how to complain yourself, for free.

What's the FCA proposing?

Here's a summary of the FCA's main proposals:

• Consumers will have until 2018 (no exact date has yet been proposed) to make a complaint about PPI policies sold up until 2016. If you submit a complaint after the deadline you'll lose your right to have it assessed by firms or by the Ombudsman.

• You'll need to obtain written acknowledgement of your complaint being received by the firm before the deadline. However the Ombudsman will be able to consider 'exceptional circumstances' if you miss the deadline, and the deadline won't apply to complaints about PPI policies sold after a 'start date' in 2016.

• The FCA will lead a communications campaign informing consumers of the deadline, which it will conduct during the consultation process. It adds that "this work does not in any way prejudge the consultation". It estimates this will cost £42.2 million over two years.

• That cost will be met by the 18 firms which the FCA says are "most responsible for causing PPI complaints" – they account for about 90% of all complaints. The fee will be £3.64 for each PPI complaint reported to the FCA between 1 August 2009 and 1 August 2015.

• The FCA is proposing new rules on the handling of PPI complaints in light of the recent Plevin v Paragon Personal Finance Ltd court case. In this case, the Supreme Court ruled Susan Plevin was treated unfairly because she wasn't told about the large amount of commission (71.8%) taken from her PPI payment.

• The FCA now proposes that firms should generally consider a complaint on the grounds of an unfair relationship if the commission was above 50%, though it adds that there is "some flexibility" around the 50% figure which the FCA came to based on its own "regulatory judgement".

• The proposed deadline would also apply to PPI complaints relating to cases similar to Plevin.

• The FCA has acknowledged that firms may not be able to provide a final response to PPI complaints in light of the proposed rules and guidance on Plevin. However it confirms that where a response has been issued, customers can take their complaint to the Ombudsman if they're unhappy with the reply.

• Redress where undisclosed commission was 50% or more of the total premium paid is proposed as follows: the difference between the commission the customer paid, eg. 70%, and the benchmark 50% figure quoted by the FCA. So in this instance customers would receive redress of 20% of the premium, plus interest on that portion as well as interest of 8%.