To encourage consumers to decide whether to act about PPI before the deadline, the FCA will run a two-year consumer communications campaign, which will be launched in August this year.
Andrew Bailey, chief executive of the FCA, said: “Putting in place a deadline and campaign will mean people who were potentially mis-sold PPI will be prompted to take action rather than put it off. We believe that two years is a reasonable time for consumers to decide whether they wish to make a complaint.
“We have carefully considered the feedback we received and we still believe that introducing a deadline for PPI complaints and a communications campaign warning of the deadline will benefit consumers.”
The regulator has also set out new complaints handling guidance for firms which centre on the amount of commission paid for the sale after the Supreme Court judgment in Plevin v Paragon Personal Finance Ltd (Plevin).
The Plevin decision means that consumers may have new grounds to complain about PPI regarding the amount of money that the providers received for the sale if the failure to disclose that commission made the relationship unfair.
As proposed, the FCA’s approach includes a 50% commission ‘tipping point’ after which if firms failed to disclose commission this created an ‘unfair relationship’ so profit share should be included in firms’ calculations of commission. So, the consumer redress calculation should reflect the excess commission over the 50% tipping point.
The FCA is making all firms write to previously rejected eligible complainants in light of Plevin to explain the new basis for complaints.
Consumers with live PPI policies will now be able to complain after the deadline if they have a future claim on their policy rejected for reasons related to the sale. The complaint must be related to the reason the claim was rejected, for example, eligibility, exclusions or limitations.
Complaints about PPI policies sold after 29 August 2017 are not subject to the deadline.
To give the industry more time to prepare, the rules surrounding Plevin will come into effect at the same time as the deadline rule – not three months before as originally planned.
Consumers who are unhappy about PPI should continue to complain to the firms concerned and to the Financial Ombudsman Service if unhappy with their response.
The regulator is urging consumers to complain as soon as possible.