29Aug

Citizens Advice finds payday lenders still not checking affordability

Despite the tough rules, laid down in the Financial Conduct Authority (FCA) rulebook, research by consumer organisation Citizens Advice (CitA) has cast doubt on the extent to which some payday lenders check that applicants can afford to repay the loan.

CitA surveyed 432 consumers between March and July 2016, and 27% of respondents said they had no recollection of any assessment of their financial situation being carried out before they were granted the loan.

The organisation also says that applicants who had no recollection of undergoing a credit check were almost twice as likely to experience repayment difficulties, when compared to those who did undergo this process. 78% of those who could not recall undergoing a credit check subsequently experienced repayment problems.

98% of respondents said it was ‘easy’ to obtain a payday loan.

The CitA press release highlights the extreme example of a man who was granted a payday loan even though his only income was from benefits, he had no permanent address, he had previously been declared bankrupt and he suffered from depression and alcoholism.

A number of respondents reported that their lender had asked for login details to their online bank account, and was using this access to take loan repayments without permission, or even to advance additional funds.

On a more positive note, CitA also reports that the number of people contacting it with debt problems related to payday lending has fallen sharply. Before the introduction of the FCA’s price caps in January 2015, an average of 2,821 people were seeking help with payday loan debt problems, but this has now fallen by 45% to 1,534 per month.

The organisation also says that in the last three years 40% of the payday lending firms have left the market.

Gillian Guy, Chief Executive of Citizens Advice, said:

“Irresponsible behaviour by some payday lenders is trapping people with loans they can’t afford.

“New measures and guidelines from the FCA have helped to clean up the market and the number of people turning to us for help has dropped significantly. But it’s clear some payday loan firms are flouting the FCA’s guidance and selling people loans costing hundreds of pounds that they struggle to pay back.

“The time has come for the FCA to turn its guidance into rules – forcing every single payday lender to carry out rigorous financial checks on potential borrowers to prevent people falling into deepening debt.

Any payday lender not strictly complying with the FCA’s rules and guidance is taking a very big risk. Short-term lenders are under considerable scrutiny from the regulator, and enforcement action has been taken against a number of firms and against at least one individual.

The Financial Ombudsman Service (FOS) has also reported a significant increase in payday loan complaint numbers. 2,729 complaints were made about payday loans during the period from April to June 2016 (the first quarter of the new financial year). The FOS received 3,168 of these complaints during the entire 12 months ending March 31 2016, and just 1,157 in 2014/15, so it appears that customers are becoming more willing to complain about payday lenders.

Furthermore, of the payday loan complaints closed by FOS in the first quarter, a majority (55%) were decided in favour of the customer. This means that lenders that fail to treat customers fairly are regularly being asked by FOS to pay compensation.

Lenders need to make sure they make responsible lending decisions, that they provide all necessary information to their clients and that they treat borrowers in arrears with compassion.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

27Aug

Complete Claim Solutions sees appeal against MOJ fine rejected, then loses authorisation altogether

Ten months after it was fined by the Claims Management Regulator at the Ministry of Justice (MoJ), a claims management company (CMC) has now been stripped of its authorisation altogether. MoJ reports on enforcement action it takes never give specific details of a company’s actions, and simply list the sections of its rulebook that have been breached, but press reports say that Complete Claim Solutions (CCS) has been encouraging clients to exaggerate the injuries they suffered in car accidents.

Tom Murray, a senior salesman at CCS, was caught in a Brighton pub telling an undercover reporter from The Sunday Times newspaper:

“They’re breaking the law by signing a document. But if they want that £2,000, they’ll lie. The lie is the buyer’s. And that’s the business what we’re in.”

The undercover reporter obtained a job with the company and wrote of how new recruits were encouraged to coach claimants – for example a recording was played in a training session of how an 80 year old woman was persuaded to make a claim despite initially telling the CCS representative that she had not been hurt in the accident.

Company trainer Jeff Kelly was reported to have told the reporter and the other trainees:

“If they say I’m not interested, say, ‘Well, would you do a tax rebate? It’s just like doing a tax rebate, really, apart from you have to lie and say that you’re injured.’”

The company still used the Complete Claim Solutions trading name, but is now officially known as Stanley Financial Holdings Limited. In cancelling the company’s authorisation in August 2016, the MoJ said the company had breached Client Specific Rule 1b and 1c of the Conduct of Authorised Persons Rules. These require companies to ensure that their service meets the needs of the client, and that all information given to clients is clear, transparent, fair and not misleading.

The Brighton-based company was fined £91,845 in October 2015 for making unsolicited marketing calls to individuals registered with the Telephone Preference Service (TPS). Like many CMCs, it unsuccessfully attempted at the time to defend its actions by saying that the leads had been obtained from a third party, when in fact the authorised company is responsible for ensuring that all consumers it contacts have indeed consented to receiving the communication. The company’s actions also risked putting any law firms it introduced customers to in breach of the Solicitors’ Regulation Authority Code of Conduct – here it is not sufficient simply to ensure that individuals are TPS-registered, and if leads are to be referred to solicitors then the recipients must have explicitly consented to receiving the call.

In an appeal to The First-tier Tribunal (General Regulatory Chamber) – Claims Management Services, CCS acknowledged it had contacted TPS-registered consumers on occasions. However, it also said that the number of calls which breached regulatory requirements were very small when compared to the total number of marketing calls made by the company, and thus rejected suggestions that their actions ‘indicate a wider systemic problem’, as the MoJ had suggested.

In rejecting the appeal the Tribunal commented that the company’s breaches lasted for a period of two years, and that they had thus had ample time to remedy the situation.

25Aug

Claims management sole trader has authorisation cancelled by MOJ for marketing rule breaches

The Claims Management Regulator at the Ministry of Justice (MoJ) has cancelled the authorisation of Swansea-based sole trader Paul Robert William Norton, who offered personal injury claims services under the trading names P N Marketing and Claim for Accidents Here.

Many of the issues that have prompted the MoJ to take this action concern his marketing practices. In total, he was in breach of six different sections of the Conduct of Authorised Persons Rules 2014:

• General Rule 2d – the requirement to maintain appropriate records and audit trails
• General Rule 2e – ensuring referrals, leads and data sourced from third parties have been obtained in accordance with applicable legislation and other regulatory requirements
• General Rule 5 –the generic requirement to comply with all relevant laws and regulations
• Client Specific Rule 4 – this prohibits all cold calling in person, such as stopping passers-by or calling door-to-door, and requires all marketing by telephone, email, fax or text to be carried out in accordance with the Direct Marketing Association’s Code and other guidance issued by the Association
• Client Specific Rule 6a – when carrying out marketing activity, the name of the company making the communication must be clearly identifiable
• Client Specific Rule 9 – authorised companies are also responsible for ensuring any marketing material issued by a third party complies with relevant legislation and rules

The MoJ has re-iterated many times that authorised claims management companies (CMCs) cannot attempt to blame third parties for breaches of the laws and rules relating to marketing. The regulator will treat any marketing communication of any kind issued on behalf of an authorised CMC in the same way as if the CMC themselves had made the communication. So if a third party sends unsolicited marketing texts, makes calls to individuals registered with the Telephone Preference Service (TPS) or issues a misleading print advertisement, then the CMC will be held accountable. The CMC will also be held responsible if it relies on the false assurance of a data supplier that all individuals on a contact list have consented to receive communications.

In its second quarter enforcement bulletin, the MoJ gave details of how Check Point Claims Limited lost its authorisation for, amongst other things, failing to ensure that recipients of automated telephone calls had given explicit consent to receiving them. Elkador Finance was fined £315,000 for failing to demonstrate that the personal data of people who received marketing calls from the company had been legally obtained. Just after the end of the second quarter, in July 2016, the MoJ fined UKMS Money Solutions Limited £50,000 after it sent 1.3 million unsolicited spam texts, and cancelled the authorisation of Reactiv Media Limited. One of the issues with Reactiv was that it made hundreds of calls to individuals who had registered with the TPS.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

23Aug

Arb Advisory fined by MOJ for complaints handling failings and other issues

Swansea-based claims management company (CMC) Arb Advisory Limited has been fined £119,500 by the Claims Management Regulator at the Ministry of Justice (MoJ). Many of the company’s rule breaches relate to the way it handled complaints.

The regulator says that the company was in breach of as many as nine sections of its rulebook:

• General Rule 2d – which requires companies to conduct themselves responsibly and to maintain appropriate records and audit trails
• General Rule 5 – which is the generic requirement for all authorised firms to observe relevant laws and regulations
• Client Specific Rule 18 – companies must keep clients updated as to the progress of their claim
• Client Specific Rule 1a – which simply asks that companies act fairly and responsibly towards clients
• General Rule 8 – this is the generic requirement to operate a complaints scheme in accordance with the MoJ rules
• Complaint Handling Rule 4 – companies must have a written complaints procedure for handling any expression of dissatisfaction about their service
• Complaint Handling Rule 9 – companies must ensure all employees (including those employed by their introducers) are aware of the complaints procedure and what it contains, and must carry out monitoring to ensure that employees comply with their obligations under this procedure
• Complaint Handling Rule 10d – responses to complaints must fully address the subject matter of the complaint and the company should offer redress where appropriate
• Complaint Handling Rule 18 – companies must maintain records of all complaints received and make these available to the MoJ as required

CMCs should now be used to the complaints regime that has been in force since January 2015. Companies must acknowledge and investigate all complaints, whether these relate to issues over costs and charges, whether the promised service has been delivered, allegations of inappropriate advice, not keeping the client informed, or any other issue.

Companies must offer redress to clients where appropriate, and all clients must be informed of their right to refer the company’s resolution of the complaint to the Legal Ombudsman. The Ombudsman has the power to issue legally binding instructions for CMCs to pay up to £30,000 per case in compensation.

Complaints must be acknowledged in writing within five business days of receipt. A CMC must issue a final response letter when the investigations into the complaint have completed, explaining: whether the complaint has been upheld or not, the reasons for the decision and details of any redress being offered

All staff within the CMC should have been trained as to how to recognise a complaint, and what to do on receipt of a complaint
The company’s written complaints procedures must be provided to clients in the following instances:

• Prior to them signing a contract with the CMC
• Whenever a complaint is made
• Whenever they request a copy

Arb Advisory, which handles payment protection insurance claims, was the subject of a 2014 article in The Guardian. The newspaper highlighted the case of a reader who said his grandmother had been repeatedly coerced into making a claim through the firm. When she eventually agreed, a fee of £360 was instantly taken from her account, even though MoJ rules forbid CMCs to take fees before a written contract has been signed.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

19Aug

Adviser loses out at FOS over FSAVC switch advice

Adviser loses out at FOS over FSAVC switch advice

The Financial Ombudsman Service (FOS) has ruled against advisory firm Kellands Northern Ireland over a recommendation to transfer a free-standing additional voluntary contribution (FSAVC) pension to a personal pension plan. The main reason behind the FOS decision appears to be the high level of upfront charges on the new plan.

The rationale used by Kellands to justify its recommendation was that the new plan had a much wider range of funds – around 250 compared to just 14 in the FSAVC.

However, the firm intended to take an initial adviser charge that amounted to 50% of the new personal pension contributions, plus 4% of the amount being transferred. When an ongoing advice fee of 0.5% per year and fund charges of 1.92% are added, this amounts to charges in the first year of 56.14%. Even though the total charges would have reduced to 2.42% thereafter, the FOS still ruled that the first year charges were sufficiently large to make the recommendation inappropriate. The fact that the client was aged 55 and was thus fairly close to retirement may have had an impact on the FOS decision.

After Kellands appealed the initial decision of a FOS adjudicator to uphold the client’s complaint, the final decision fell to ombudsman Roy Milne.

Mr Milne’s judgement said:

“She wasn’t working at the time and the contributions were always likely to be relatively small. This was a small fund and the growth rate required to overcome the effect of charges would be quite high.

“In my view, the advice to start a new PPP was unsuitable. I think that the existing plan could have been continued. I agree with the adjudicator that a comparison of the existing FSAVC should be made with the new PPP.”

Kellands must now pay compensation of £7,342 to the client.

Financial Conduct Authority guidance says that no client should be recommended to switch a pension arrangement to another plan with higher charges unless there is good reason for this. Kellands presumably believed that the much greater fund choice available in the personal pension justified a recommendation to switch, however the FOS adjudicator and Mr Milne both disagreed.

Firms that try to justify pension switches on the basis of giving the client a much wider fund choice also need to consider whether the client would actually benefit from a wider choice, and whether they would use it. For example, a client who has always been content to have their pension invested in a generic managed type fund may not be attracted by the opportunity to invest in specialist areas such as emerging markets or technology.

Some within the industry have suggested that this judgement suggests the FOS is in effect becoming a price regulator. However, when the charges on a new plan are so high that the level of performance required to offset them becomes unachievable, then any recommendation to switch must be regarded as poor advice.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

19Aug

Adviser loses out at FOS over SIPP advice

The Financial Ombudsman Service (FOS) has ordered Independent Financial Advisory Ltd to compensate a client who was recommended to switch his stakeholder pension plan into a self invested personal pension (SIPP).

Mr M had a relatively small stakeholder pension pot of £37,000, and was advised by the firm to move it to a SIPP. His stakeholder contributions had been invested in an income fund and a gilt fund, and following the switch, his new SIPP was invested in a special situations fund and a global ‘absolute returns’ fund.

A key part of the FOS decision was their belief that the client’s investment objectives could have been met had he remained in the stakeholder plan. He was a cautious investor and the SIPP charges were higher than for the stakeholder plan.

Ombudsman Keith Taylor agreed with the decision of the original FOS adjudicator to uphold the complaint, by saying:

“The suitability letter says that Mr M’s objective was to have flexibility in investment choice and a more actively managed investment structure. But I think these aims could have been achieved within his existing stakeholder pension.

“I don’t think he is a sophisticated investor in the sense that he required access to unusual or esoteric investments that weren’t available within his existing stakeholder pension.”

Financial Conduct Authority guidance says that when considering pension switches, firms must always ask themselves ‘will the existing plan meet the client’s objectives?’ If the answer to this is Yes, then it becomes very difficult to justify a recommendation to switch.

Some claims management companies are becoming involved in the pensions advice arena, and are particularly active in pursuing claims on behalf of customers who were recommended SIPPs, when a regular personal pension may have been just as good, if not considerably cheaper.

Firms thus need to be confident that a SIPP is the best option for the client before recommending them. They must also note that they are responsible for ensuring that the underlying investments the SIPP contributions will be invested in are suitable.

Data from the Association of British Insurers shows a massive increase in recent years in the number of SIPPs being sold, although these figures relate to all sales of SIPPs and not just those sold through advisers. Only 150,319 SIPPs were effected in 2011, yet by 2015 this figure had risen to 1.7 million. With the advent of the pension freedoms, sales more than doubled in the space of 12 months, as 607,744 SIPPs were taken out in 2014.

Scott Gallacher, a financial adviser at Rowley Turton, commented:
“It has always been the case that clients come in thinking they need a SIPP, and in most cases they don’t. There has been a change in the market where SIPPs have become more mainstream.”

SIPPs are also responsible for much of the compensation being paid by the Financial Services Compensation Scheme to clients of failed advice firms.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

18Aug

FCA publishes research on predicting consumer debt problems

In August 2016, the Financial Conduct Authority (FCA) published an updated version of its study entitled ‘Can we predict which consumer credit users will suffer financial distress?’

Lenders of all types, as well as firms who operate peer-to-peer lending platforms, need to be aware of the need to lend responsibly. Only clients who pass rigorous credit and affordability assessments should be allowed to borrow. However, beyond this, predicting exactly who will have difficulty meeting their repayment obligations can be very difficult.

This report by John Gathergood, Associate Professor of Economics at the University of Nottingham; and Benedict Guttman-Kenney of the regulator’s own Behavioural Economics & Data Science Unit attempts to provide some answers to that difficult question.

In part of course, financial distress can be predictable if consumers take on debts that they were never likely to be able to repay. However, financial distress can also be unpredictable as an individual who was able to service the debt when the credit product was taken out may then experience an unforeseen event, such as becoming divorced, unwell or unemployed.

The report suggests that there is a strong correlation between having a high debt to income (DTI) ratio and suffering financial distress. Although firms should note that no FCA rules have been altered yet as a result of this report, the authors suggest that an applicant’s DTI ratio should be a key part of any lender affordability assessment.

The 10% of individuals with the highest outstanding consumer credit debts have debts equivalent to 31% of their gross annual household income, whereas if we look at all individuals with credit debts, this figure is just 12%.

The research finds that individuals who experience financial distress as a result of debt problems are different from the average member of society in that they are: typically younger, less likely to be employed and more likely to hold higher cost credit items (such as payday loans).

Those whose debt levels include a high proportion of high cost credit debt are also at greater risk of suffering financial distress. People with higher proportions of their debts in high cost credit items are 80% more likely to suffer future financial distress when compared to individuals in debt in general. Those with debts to pawnbrokers were actually slightly more likely to experience distress than payday loan borrowers, although both types of borrower were significantly more likely to experience distress than those holding personal loans.

The paper also acknowledges that it may be financially attractive for lenders in certain areas of the credit sector to take on clients who are likely to default on their repayments.

People in financial distress were also found to be significantly more likely (37%) to experience anxiety problems, and were 14% less likely to say they were satisfied with life in general.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

15Aug

CMA reveals retail banking competition measures

The Competition and Markets Authority (CMA)’s retail banking market investigation has been published, which explains how larger and older, well-established banks currently enjoy significant advantages when it comes to securing business from customers. This lack of competition means that consumers pay more for banking services in many different areas.

The new measures announced by the CMA include:

• A requirement for all banks to fully implement Open Banking by early 2018. Open Banking is concerned with how data sharing between banks and financial institutions can be used to help people when conducting financial transactions. It should allow customers to manage their accounts with different providers via a single ‘app’, and to compare prices, standards and the location of branches via the same app. It will require customers to consent to their bank sharing their personal data with the technology provider
• New obligations for banks to publish information on their quality of service on their websites and in branches
• A requirement for banks to prompt customers before events occur such as their local branch closing, or the charges on their financial product increasing
• A cap on the fees that can be charged for unscheduled overdrafts, although each bank will be able to set their own cap and no minimum industry standard will apply
• A promotional campaign to encourage more people to switch accounts, backed up by an extension of the length of time people have to re-direct transactions to the new account, and by a new regulator for the Current Account Switching Service

Alasdair Smith, who chaired the investigation, said:

“The reforms we have announced today will shake up retail banking for years to come, and ensure that both personal customers and small businesses get a better deal from their banks.

“We are breaking down the barriers which have made it too easy for established banks to hold on to their customers. Our reforms will increase innovation and competition in a sector whose performance is crucial for the UK economy.

“Our central reform is the Open Banking programme to harness the technological changes which we have seen transform other markets. We want customers to be able to access new and innovative apps which will tailor services, information and advice to their individual needs.

“This is backed up by a wide package of measures to improve the current account switching service, to make it easier for small businesses to shop around and open new accounts or get a loan, and to see how the quality of service provided by your bank compares with other providers.

“We are also taking measures to give customers much greater control over their overdraft charges, so that they are clearly told when they are about to be incurred and have an opportunity to avoid them. Alongside this, banks will have to cap their monthly charges for unarranged overdrafts.”

Some organisations reacted to the report by suggesting it did not go far enough.

Alex Neill, director of policy and campaigns at consumer organisation Which?, said:

“It is disappointing that the monthly charge cap is not actually a cap and banks will be allowed to continue to charge exorbitant fees for so-called unauthorised overdrafts, rather than protect those customers that have been identified as among the most vulnerable.”

Andrew Tyrie MP, chairman of Parliament’s Treasury Select Committee, suggested consumers would be wary of the data security implications of the Open Banking technological advances.

Craig Donaldson, Chief Executive Officer of Metro Bank, expressed his dismay that the report did not address the issue of capital requirements, which he says disproportionately favour the larger banks.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

13Aug

Treasury committee publishes exchange of letters regarding crowdfunding regulation

Treasury committee publishes exchange of letters regarding crowdfunding regulation

Parliament’s Treasury Select Committee has published an exchange of letters between its chairman, Andrew Tyrie MP, and the individuals who at the time were the chief executives of the two main financial regulators – the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

On June 1 Mr Tyrie wrote to acting FCA chief executive Tracey McDermott and PRA head Andrew Bailey, and sent copies of the letter to the Chancellor of the Exchequer, George Osborne MP.

In his letter to Ms McDermott, he asked:

1. Who was responsible for ensuring that accurate information was provided to crowdfunding investors?
2. Were incentives in place for firms operating crowdfunding platforms to fully assess the creditworthiness of borrowers and investors?
3. To what extent did the FCA believe consumers understood the risks associated with crowdfunding?
4. What impact has the growth of crowdfunding had on competition?

In the letter to Mr Bailey, he asked:

1. To what extent did the PRA believe the crowdfunding sector could withstand economic shocks?
2. What impacts existed as a result of the financial sector’s increased exposure to unsecured loans through crowdfunding platforms?

In response to each question, Ms McDermott replied as follows:

1. FCA rules require firms to provide information that is ‘clear, fair and not misleading’. Crowdfunding customers must be informed of the nature and risks of their investment. Since October 2014 the FCA has reviewed 27 peer-to-peer lending (loan-based crowdfunding) financial promotions, and has requested that 12 of these were amended or withdrawn. The FCA also asked for amendments or withdrawals for nine of the 10 cases of investment-based crowdfunding promotions it reviewed.
2. P2P firms have commercial incentives to lend to creditworthy borrowers. If the borrower is an individual, or a small business, the P2P firm has to comply with creditworthiness rules which are equivalent to those applying to firms that actually provide credit themselves.
3. Under FCA rules, investment-based crowdfunding firms are required to assess the level of knowledge, experience and understanding of the investor, even for non-advised sales. In the case of P2P, the FCA says it has evidence of a high level of understanding of the risks amongst investors, and that further research will be carried out to assess this in the future.
4. The crowdfunding sector remains relatively small at present, but if it continues to grow, increased competition should be expected.

In his reply, Mr Bailey commented that the PRA is not responsible for prudential regulation of crowdfunding firms. He did however comment on the importance of crowdfunding customers understanding the risks involved, and that they would not have access to the Financial Services Compensation Scheme in the event of a firm failing. He summarised his organisation’s position by saying that “the crowdfunding sector is currently too small to be systemically important to the UK financial system”, but added that “[The Bank of England] will continue to monitor growth in the sector and any prudential risk it may pose to the firms it supervises and to the financial system more broadly.”

Since this exchange of letters, Mr Bailey has left the PRA to become the permanent chief executive of the FCA, while Ms McDermott has left the FCA. Mr Osborne is also of course no longer the Chancellor.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

10Aug

FCA proposes PPI deadline in June 2019

A deadline on when a payment protection insurance (PPI) claim can be made has looked likely for some time. Now for the first time we have a date – the Financial Conduct Authority (FCA) is proposing June 30 2019 as the deadline, contrary to earlier suggestions of a cut-off sometime in 2018. Essentially, any customer who has received a firm’s acknowledgement of a PPI complaint by June 30 2019 will still be entitled to refer the matter to the Financial Ombudsman Service (FOS), but any customer who misses this deadline will not be able to refer it to the FOS.

The deadline will also only apply to complaints made about the suitability of PPI – complaints about claims and administration will not be subject to a deadline. There will also be no restriction on the ability of consumers to claim for PPI sold after the deadline.

A major publicity campaign will commence on June 30 2017, two years before the deadline, to ensure that people are aware of the need to submit their PPI complaints before the middle of 2019. The campaign will include advertising on TV and on outdoor billboards, and in the words of the regulator, “the consumer communications campaign would be designed to reach all adults in the United Kingdom.” The campaign is to be funded by the 18 firms that were collectively responsible for 90% of the PPI complaints between August 1 2009 and August 1 2015, and the firms will pay £3.64 for each PPI complaint received between these dates.

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.”

Gillian Guy, Chief Executive of consumer organisation Citizens Advice largely welcomed the deadline, but expressed fears on how claims management companies might react to the news. Ms 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.”

In recent weeks Barclays and Royal Bank of Scotland have further increased their PPI provision, perhaps because they believe the announcement of a deadline will lead to a surge of new complaints.

At the same time as it announced the claims deadline, the FCA also opened a consultation into some proposed changes to the way it will allow commission-related PPI complaints to be made. Following a recent court case, known as the Plevin judgement, consumers will be able to table PPI complaints on the grounds that the firm selling the insurance failed to disclose an amount of commission that was equivalent to 50% or more of the insurance premium. The regulator is now proposing that profit share is included in the definition of commission to be used, and that any previous rebates paid to a customer when they cancelled their PPI policy can be used to reduce any redress due.

This consultation closes on October 11 2016, and new rules regarding the commission issue are expected to come into force in March 2017. The forthcoming advertising campaign will specifically highlight to consumers that PPI complaints can be made on the grounds of undisclosed commissions, as well as for mis-selling.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

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