Consumer financial website Moneysavingexpert.com has responded to the Financial Conduct Authority (FCA) consultation on payment protection insurance (PPI), and has referred to the regulator’s proposals as “a gross injustice”.
The FCA has been consulting on two proposals:
• A deadline, sometime in 2018, after which PPI mis-selling complaints will not be considered
• A requirement for firms to pay compensation to consumers who complain about undisclosed commission on PPI contracts, and where this commission amount exceeded 50% of the premium. This follows a recent court judgement, known as the ‘Plevin case’
In his executive summary to his firm’s response, Moneysavingexpert.com founder Martin Lewis called the deadline (or time-bar) “an anti-consumer move.” He cited the fact that many firms still have large numbers of PPI complaints upheld by the Financial Ombudsman Service – which effectively means that the firm incorrectly rejected the complaint originally – and suggested that only firms with an FOS uphold rate of below 20% should benefit from the deadline.
Mr Lewis also remarked on the apparent contradiction between suggesting a PPI deadline at the same time as paving the way for a new wave of complaints as a result of the Plevin judgement. Regarding commission-related complaints, he commented:
“Against all natural justice the FCA plans to put a time-bar on this too, even before it’s started. This is plainly ridiculous and even if a time-bar is imposed Plevin cases should not be covered by it.”
He then suggested that the deadline would be introduced anyway, regardless of his views, and turned his attention to ensuring that every consumer was made aware of the fact their right to complain was to be removed. Mr Lewis commented:
“However, as it is well known this consultation is a farce in terms of the time-bar – it is going to happen anyway – we also need to address the way to limit the damage of this move.”
The 18 firms that sold the most PPI policies have been informed that they will need to fund an advertising campaign alerting people to the deadline. Mr Lewis called for this campaign to go further, by saying:
“For a time-bar to work, every single person who has had PPI must be written to by their bank to inform them of the details.”
The best chance of seeing the deadline scrapped may lie with a legal challenge being mounted by claims management company We Fight Any Claim. The company has received legal opinion that the deadline contravenes the FCA’s statutory objective to protect consumers.
Supporters of the deadline cite the fact that, by 2018, ten years will have passed since most of the mis-selling occurred, and that this length of time should be sufficient for a consumer to make a complaint. Having to set aside massive sums for PPI compensation has also delayed the return to profitability of some leading banks, and in some cases has extended the period of time for which they have been in state ownership. In late February 2016, Royal Bank of Scotland (RBS) declared a loss of £2 billion, and announced it had been forced to increase its PPI compensation reserve to £4.3 billion, of which £3.3 billion has already been paid. RBS is still 73% owned by the Government.
The FCA’s PPI consultation has now closed.
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.