Rumours have been circulating in recent weeks that the issue of a time limit on when payment protection insurance (PPI) claims can be made is back on the agenda.
Sky News has now gone further, and has reported that the issue was debated at a meeting of the Financial Conduct Authority (FCA)’s board on September 24 2015. The Sky report has been widely reported elsewhere, including in the Daily Telegraph and in a number of financial trade publications.
It is reported however that a decision from the regulator is not expected imminently, and that a consultation is likely to take place before any cut-off date is imposed.
Although many of the mis-sold PPI plans were effected around a decade or more ago, complaints made today are still likely to be considered. This is because the customer may not have realised they had PPI, may have been incorrectly told it was compulsory in order to be approved for the associated loan, or may not have realised until now just how unsuitable it was.
It may be the case that the change of chief executive at the FCA has put this issue back on the agenda. Martin Wheatley, who was sacked as FCA chief in the summer, had publicly said he was not minded to introduce a time limit.
When the initial rumours broke in August 2015, the bosses of consumer organisation Which? and consumer financial information website Moneysavingexpert.com were prompted to write a joint letter to the FCA’s acting chief executive Tracey McDermott, urging her organisation not to impose a cut-off. They said that the move would be contrary to the interests of consumers, would provide banks with an easy solution to a problem they had created, and result in PPI claims being considered by the courts rather than the Financial Ombudsman Service (FOS).
Others believe however that it is time to draw a line under the long-running PPI scandal. PPI complaints have dominated the FOS’s workload since 2008, and Moneysavingexpert.com recently reported that a consumer had successfully claimed for two policies sold in 1991. The banks have set aside huge sums to pay compensation, which has badly hit their profits. The PPI saga may also have played a part in delaying the Government’s attempts to dispose of its shareholding in Royal Bank of Scotland and Lloyds Banking Group, thus having a wider impact on the economy as a whole.
The FCA is also yet to give its reaction to the court case of Plevin v Paragon Personal Finance, even though it originally said a statement would be issued in summer 2015. Mrs Susan Plevin successfully argued in court that the lender’s failure to disclose the existence of a large commission payment created an unfair relationship. Research agency Autonomous has warned that if the FCA instructs firms to re-review PPI complaints in the light of this judgement, the industry’s compensation bill could rise from the current level of £26 billion to as much as £59 billion.
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.