The Financial Conduct Authority (FCA) has said it plans to push ahead with the introduction of a time-bar on PPI reclaiming, with the cut-off now expected to be in place by June 2019.
MoneySavingExpert.com has consistently campaigned against any cut-off date for reclaiming, so we're disappointed by today's announcement. Anyone who thinks they may have been mis-sold PPI should check now if they can reclaim – see our Reclaim PPI for Free guide for full help.
The financial regulator, which had previously suggested a deadline could come into effect in 2018, this morning said it wants the rule for setting the cut-off to come into force alongside a public awareness campaign midway through next year.
The deadline for reclaiming PPI would then fall two years later, by the end of June 2019. These timings though are subject to the feedback the FCA gets in its latest consultation, which will close on 11 October this year.
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'We knew all along it was a done deal'
Commenting on today's announcement, Guy Anker, managing editor at MoneySavingExpert.com, said: "We are very disappointed the FCA has chosen to all but certainly put a time-bar on PPI reclaiming even after many warnings of the danger.
"We knew all along it was a done deal that the FCA was going to put a cut-off time on PPI reclaiming, and nothing much has changed. All it's really asking for is suggestions of how it tweaks its implementation.
"But how can it argue this is being done to protect consumers when the uphold rate at the Financial Ombudsman is still about 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 of two years from when the clock starts ticking, although we think it should be longer, and the FCA is choosing to do a widespread communication campaign. 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'd said 'no'.
"Plus if you have already made a past PPI complaint that was rejected by the bank but you didn't go to the Ombudsman, you should restart your complaint now. Banks have been fined for poor complaints handling – your bank rejection doesn't mean you weren't mis-sold."
What has the FCA said today?
The regulator announced today that it believes the package of proposals on PPI complaints laid out in its consultation last November should be taken forward. That package includes imposing a deadline for PPI claims and launching a consumer communications campaign to raise awareness of it – so these are now both likely to go ahead.
The PPI communication campaign will be funded 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.
However, the FCA's also now consulting on new changes it's proposing to the way PPI complaints are handled in light of the Supreme Court judgment in Plevin vs Paragon Personal Finance Ltd.
That court ruling held that Susan Plevin had been treated unfairly because she hadn't been told about the large amount of commission (71.8%) taken from her PPI payment. Last November the FCA said firms should generally consider a complaint on the grounds of an unfair relationship between lender and borrower if commission was above 50%.
The three new proposals the FCA is consulting on are:
- that profit share be included in the FCA's approach to the assessment of fairness and redress. Profit share refers to arrangements for firms 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.
- that previous rebates to a consumer when they cancelled their PPI policy should be partly reflected in any redress due.
- clarified rules setting out exactly how firms should assess fairness and redress where commission or profit share rates vary during the life of the PPI policy.
How exactly will the deadline work?
If the FCA continues with its plans and the deadline comes into effect in June 2019, then:
- Based on plans previously set out by the FCA, it seems likely you'll have until June 2019 to complain about PPI policies sold up until June 2017 – we're checking with the FCA that this cut-off point still applies and will update this story when we know more.
- You'll need to get acknowledgement in writing 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.
- If you submit a complaint after the deadline you'll lose your right to have it assessed by firms or by the Ombudsman.
- Based on the plans previously set out by the FCA, it seems the deadline won't apply to complaints about PPI policies sold after June 2017 – though again, we're waiting for the FCA to confirm this is the case.
What happens next?
Under the revised timescales published today, here's what the FCA expects to happen next:
- 11 Oct 2016 – FCA's extended PPI consultation closes. Anyone who wants to respond to the further consultation has until then to do so – see how here.
- End of Dec 2016 – Deadline and rule changes confirmed. The FCA will publish its rules and guidance on the claims deadline, the consumer communications campaign (including its cost) and other changes to PPI complaints handling in light of the Plevin judgment by the end of the year.
- End of Mar 2017 – Plevin rule changes and fee rule come into effect. These are likely to come into force within three months, to allow firms time to prepare for and carry out the provisions on Plevin.
- End of Jun 2017 – Rule setting claims deadline comes into effect. The consumer communications campaign is also due to start at this time – the timing is to allow the FCA to have enough time to prepare the campaign after the deadline rule is set.
- End of Jun 2019 – PPI reclaim deadline comes into effect. This is due to be two years after the deadline rule comes into force, so the end of June 2019 is now the likely date.