The Financial Conduct Authority (FCA) has launched a public consultation on the idea of putting in place a time limit for consumers to claim back mis-sold PPI.
The FCA plans to put in place a potential time limit for claims of two years from when the new rules come into force.
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As part of the consultation, the FCA also proposed a ‘high profile’ FCA-led consumer communications campaign, to which firms would be asked to contribute. Specifically, the FCA said 18 firms who have received 90% of PPI complaints would be asked to pay a combined £42.2m over two years.
The FCA revealed that over £21bn of PPI redress had been paid since 2011, which it admitted had continued on a larger scale and for longer than was anticipated when the scheme was launched in 2010.
Despite the continued scale of people reclaiming, the FCA said it had found that there was a ‘significant’ population intending to complain but had not done so due to not making it a priority or not being sure about how to complain. A further ‘significant’ population of consumers intended to check whether they had PPI, but had not done so.
The regulator said: "This leads us to draw the further key conclusion that the perceived open-ended nature of the current complaints-led approach to PPI redress contributes to a significant degree of consumer inertia."
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By GlobalDataThe FCA surmised that by placing a time limit and launching a consumer awareness campaign, consumers would be prompted into action. It might also lead to more consumers complaining directly, rather than using claims management agencies, increase the efficiency of PPI complaints handling and bring the issue to an ‘orderly conclusion’ the FCA said.
The regulator rejected the idea that a time limit would be detrimental to consumers, instead saying: "The proposed intervention would lead to a higher level of complaints and redress than if we did not intervene."
The deadline for comment on the proposed deadline and rules is 26 February 2016.
