In light of a Supreme Court judgment from 2014, Plevin v Paragon Personal Finance, a secured loan lender subsequently liquidated in 2008, a regulatory investigation concluded there was a case for hard deadlines for complaints to providers or the Ombudsman.
The FCA flagged the incoming time bar in January and May 2015 and the consultation will start before the end of the year.
The FCA will also lead a consumer awareness-raising campaign and in a further consultation, propose extra rules and guidance covering PPI complaints-handling. The results of this consultation will be published before the end of 2015.
PPI sales fell dramatically after early 2009 but over £20 billion in redress has been paid to over 10 million consumers so far.
FCA evidence confirmed a high and growing number of complaints have arrived through claims management firms, also that an increasing number of complaints relate to pre-dating 2005 or 2000. In a fair number of these cases, the complaint doesn’t involve PPI, the evidence has gaps and the oral evidence is increasingly stale. The regulator said the absence of a deadline also appears to be contributing to consumer inertia.
The FCA wants to bring the PPI issue to an ‘orderly conclusion, reduce uncertainty for firms about long-term PPI liabilities and help rebuild public trust in the retail financial sector.’
The FCA also said it hopes action will encourage more direct-to-firm complaints instead and a reduction in the numbers using claims management firms.
The second consultation proposes to tighten up the rules surrounding PPI complaints handling against lenders on or after 6 April, 2008.
This will enable the regulator to step in more quickly if it suspects poor performance from firms.
The consultation will involve complaints previously rejected by the seller, situations where alternative redress might be appropriate or was sold by someone other than a lender, like an adviser.
Relationships which agreed commission payments worth over 50% of the deal will also be re-examined during the consultation.
Around 75% of PPI complaints are upheld as mis-sold under the current rules and guidance and, in almost all cases, paid full return of premium and historic interest.
The average commission on PPI was around 67% for 12 large distributors in the period 2002-2006, according to a 2009 Competition Commission report.
Chief executive of AMI and the AFB, Robert Sinclair, said: “I’m relatively comfortable with how this appears to have landed in terms of apparent response from the regulator.”