Claims management company We Fight Any Claim has applied to the High Court for a judicial review of the financial regulator's decision to set a time-bar on PPI claims.
The legal challenge comes after the Financial Conduct Authority (FCA) set a final deadline of 29 August 2019 for consumers to reclaim mis-sold PPI. Payment Protection Insurance or PPI is designed to cover your loan or credit card repayments in the event of an accident, sickness or unemployment – but was frequently mis-sold.
MoneySavingExpert.com would NEVER suggest using a claims firm to reclaim PPI – see our Reclaim PPI for Free guide for how to do it yourself.
But MSE founder Martin Lewis has previously warned the reclaim deadline is a mistake and puts the protection of the financial industry ahead of consumers.
'More than £50 billion' could still be unclaimed
Now that We Fight Any Claim has applied for a judicial review, a High Court judge will need to weigh up the evidence in its claim and seek a response from the FCA before deciding whether to let the judicial review proceed. This is to ensure the court's time is not wasted.
A judicial review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body – such as the FCA's PPI deadline decision. In this case, We Fight Any Claim would like the judge to rule against the time-bar or get it extended.
The company argues the time-bar is wrong because it estimates that as of February this year consumers could still have been owed more than £50 billion for mis-sold PPI – and so bringing in a deadline is likely to mean some who are owed do not end up claiming.
If a judicial review is granted, there will be a separate hearing where a judge has to decide if the FCA's time-bar is lawful or unlawful.
In the judicial review, We Fight Any Claim has named the Financial Ombudsman and the British Bankers' Association as 'interested parties' – ie, anyone other than the claimant and defendant directly affected by the claim.
What the FCA says
The FCA will run a two-year communications campaign from August 2017 to encourage consumers to decide whether to act about PPI before the deadline.
An FCA spokesperson said: "We have received a claim for judicial review of rules and guidance related to our decision to introduce a deadline for PPI complaints. We are currently reviewing the claim."
The FCA has previously insisted that "two years is a reasonable time for consumers to decide whether they wish to make a complaint".
A British Bankers' Association spokesperson said: "We welcome the introduction of the FCA's PPI mis-selling deadline and are disappointed to hear that it has been challenged in the courts. The regulator's deadline for PPI complaints provides additional clarity for consumers, with the accompanying awareness campaign intended to prompt action and help ensure customers who deserve compensation receive it."
A Spokesperson for The Financial Ombudsman said: "We remain focused on providing answers to PPI complaints - people should act now if they think that they've been mis-sold PPI. It’s easy to make a complaint yourself and you do not need to use a claims management company. If you're not sure what to do you can contact us."