The FCA has this morning issued a statement outlining key proposals on which it intends to consult by the end of the year in relation to the handling of Payment Protection Insurance (“PPI“) mis-selling complaints.
The statement follows the FCA’s announcement earlier in the year that it would assess whether there was a need for further intervention in PPI complaints handling generally, and specifically in light of the issues raised in the Supreme Court judgment in Plevin v Paragon Personal Finance Ltd (“Plevin“).
In particular, the FCA proposes to consult on the following:
- introducing a deadline by which consumers would need to make their PPI mis-selling complaints or else lose their right to have them assessed by firms or the Financial Ombudsman Service. The deadline is likely to be two years from when the proposed rule comes into force – hence PPI consumers would have until at least spring 2018 to complain;
- launching a communications campaign to accompany the introduction of the deadline, in order to “prompt many consumers who want to complain… into action” and “bring the PPI issue to an orderly conclusion” – the FCA is hopeful that customers will choose to complain directly to firms rather than through Claims Management Companies;
- in relation to Plevin cases, limiting the FCA’s new rules to PPI complaints (and not other financial products) where a claim could be made against a lender under s.140A of the Consumer Credit Act 1974. That means that sums must have been payable (or capable of becoming payable) under the underlying credit agreement (which the PPI covered or covers) on or after 6 April 2008;
- determining that firms should presume that a failure to disclose a commission of 50% or more gave rise to an unfair relationship under s.140A in the context of a PPI sale – consultation will be on the basis of when this presumption should be set aside, and whether non-disclosure of a commission of less than 50% could be regarded as giving rise to an unfair relationship;
- establishing that redress for Plevin cases should be based on the difference between the actual commission paid and a “fair commission” of 50%, plus historic interest paid by the customer, plus 8% simple interest; and
- deciding not to require or expect firms to proactively review previously rejected PPI complaints against the new rules and guidance.
Following this statement, the FCA intends to issue a consultation paper setting out the full detail of their proposed rules and guidance, the evidence they considered, their reasons for proposing them, and their assessment of the costs and benefits. The consultation paper will be published before the end of the year. However, the FCA cautioned that “what we have set out in this Statement may ultimately be subject to change” following the consultation.