The city regulator said it will go ahead with the package of proposals on PPI laid out in a 2015 consultation, which included a deadline for making new claims.
The FCA said it wants the rule setting the PPI complaints deadline to come into force by the end of June 2017 and will launch a consumer awareness campaign at the same time. The final deadline for claims is set to come into effect two years later.
Consumers who think they have been mis-sold PPI should continue complaining to the firms concerned and to the Financial Ombudsman Service, the FCA said.
Andrew Bailey, chief executive of the FCA, said: “Putting a deadline on PPI complaints will bring the issue to an orderly conclusion in a way that protects both consumers and market integrity.
“We have listened to all the feedback we have received and believe that the steps we are taking are the right ones. We will ensure that our communications campaign will engage with all those who could be affected, particularly vulnerable consumers.”
Since January 2011, a total of £24.2bn has been paid out to customers who were mis-sold PPI.
Alex Neill, director of policy and campaigns at Which?, said: “The PPI scandal has been one disaster followed by another, it is the country’s biggest financial scandal with a wholly inadequate redress scheme.
“If a PPI deadline is to be introduced, when millions of pounds are still being set aside for payouts, the FCA must work with banks to ensure that customers who might not know they were mis-sold PPI get back the money they are owed. The process for making a claim must be much more straightforward.”
Citizens Advice, which said it helped people with 4,000 PPI issues in the last year, welcomed the deadline but warned consumers to be wary of cold callers.
Chief executive Gillian Guy said: “A deadline on raising PPI mis-selling claims will help to bring finality to this ongoing scandal.
“But we are concerned consumers will be inundated by cold calls from claims management companies who charge up to 40% of what victims get in compensation, despite people being able to make these claims for free.
“It’s crucial any deadline is backed up by free and independent advice so people can get all the help they need to make a claim. The claims management regulator should implement its proposals to cap the fees that companies can charge consumers.”