FCA to set PPI deadline after detecting 'false claims'

The regulator wants to introduce a deadline for two years after the rule change comes in from when consumers lose the right to have their claims assessed by firms or the ombudsman service.

The regulator thinks the deadline will likely fall on some time after summer 2018.

As well as a firm stop on complaints, the FCA will start a consumer education campaign urging people to bring their complaint.

Further details and reasons behind the FCA's proposals will be published in a consultation paper before the end of the year. The FCA will also announce at a later date how this will be funded.

PPI is a multi-billion pound insurance misselling scandal, which has so far led to a raft of banks being fined and total redress payouts of £20bn to 10 million consumers.

The FCA's rules on PPI complaints handling have been in place since 2010 and dictate firms have to process complaints within a given timeframe. 

The regulator decided to revisit the rules in light of a court case - Plevin v Paragon Personal Finance (November 2014) - which decided failing to disclose commission received from PPI sales created an 'unfair' relationship between lender and borrower.

The regulator has been gathering evidence around PPI since January, in which it found a growing trend in the use of claims management companies and a high number of old claims being brought alongside a "significant proportion of complaints made (which) turn out not to have involved a PPI sale".

It also detected consumer inertia around bringing claims which it blamed on the open-ended deadline currently in place.

It said it wants its intervention to encourage consumers to claim directly from firms, while bringing the issue to "an orderly conclusion, reducing uncertainty for firms about long-term PPI liabilities and helping rebuild public trust in the retail financial sector."