With the payment protection insurance (PPI) claims deadline just nine months away, the Financial Conduct Authority (FCA) has proposed a new requirement that would see firms that sold PPI required to write to around 150,000 customers who have previously had PPI complaints rejected. In these mailings, the firms would need to make it clear that the customers may be eligible to make a new complaint under the Plevin ruling, which relates to a failure by the firm to disclose the commission payment on the insurance contract. The customers affected would be those who have already had a Plevin complaint rejected, but who may in fact have legitimate grounds for a complaint due to an issue known as recurring non-disclosure (RND).

Under Plevin, customers can make a claim if their firm failed to disclose receipt of a commission payment equivalent to 50% or more of the premium.

Where the PPI contract involved payment of a regular premium, firms should assess commission disclosures not only at the point of sale but on an on-going basis. Recurring non-disclosure (RND) is the term the FCA uses for this issue, where a firm may have failed to disclose commission payments received throughout the term of the contract. In essence, the Plevin ruling requires firms to pay compensation to the client if RND occurred during the contract term, even if the initial commission was fully disclosed at point-of-sale.

Essentially the FCA’s guidance to firms is:

  • Firstly, assess a PPI complaint on the grounds of mis-selling
  • If it determines that mis-selling has not occurred, secondly assess the case on whether sufficient disclosure was made of a large commission payment at point-of-sale
  • If it determines that sufficient disclosure was made at point-of-sale, but the contract is regular premium, the case should then be assessed on whether RND has occurred

With the deadline approaching, the FCA needs to act quickly on this issue. The consultation on this mailing requirement lasts for just one month and will close on December 7 2018. The regulator then anticipates publishing new rules in late January 2019, and the firms affected will be required to send all of their mailings by April 29 2019, which is four months prior to the deadline.

Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations at the FCA said:

“The final guidance resolves an area of uncertainty and will ensure fair and consistent outcomes for regular premium PPI complaints.

“The proposed mailings will help certain consumers who have previously complained about regular premium PPI but been rejected to engage with our campaign and consider whether they want to make a new complaint about undisclosed commission before the deadline.

“Together, these measures support the good progress we are making toward bringing the PPI issue to an orderly conclusion in a way that secures appropriate protection for consumers.”

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