PPI firms should fund £42m claim deadline awareness drive, says watchdog
Firms responsible for the bulk of PPI complaints should fund a £42 million awareness drive ahead of a proposed deadline for consumers to complain about the products, the City watchdog has suggested.
The Financial Conduct Authority (FCA) said that introducing a cut-off point for complaints about payment protection insurance, combined with a "high-profile" consumer communications campaign, could prompt some people into action, by checking whether they had the insurance, making a complaint and potentially receiving compensation sooner.
Consumer group Which? described it as "hugely disappointing" to see the regulator pushing ahead with a proposed time limit on PPI claims.
The FCA announced in October that it would consult on a deadline. The consultation, setting out details of the proposals, was launched on Thursday and any comments should be received by February 26.
The proposals could come into force next year and a PPI deadline would be set two years after the proposed rules came into force. This means the proposed cut-off would be likely to be in 2018.
PPI customers would need to complain to a firm on or before the deadline or lose their right to have their complaint assessed by the firm or the ombudsman.
The ombudsman would still be able to deal with complaints submitted after the deadline in exceptional circumstances, under the proposals.
The FCA is proposing to lead a UK-wide campaign to raise awareness of the deadline in the two-year period, including TV and outdoor advertising as well as direct marketing and digital advertising.
The FCA said: "We estimate the cost of the proposed consumer communications campaign as £42.2 million over two years. To fund this, we are proposing a new fee rule, applying to 18 firms (who receive around 90% of PPI complaints), requiring them to pay this sum over two years."
PPI is the most complained-about product seen by the Financial Ombudsman Service (FOS), which resolves disputes between consumers and financial firms.
The FCA said that since PPI complaints began rising in 2007, firms have handled more than 16.5 million cases, upholding 75% and paying more than 12 million mis-sold consumers over £21 billion in redress.
Firms have also sent out 4.8 million letters so far out of a planned 5.5 million to customers thought to be at "high risk" of having been mis-sold PPI who have not yet complained.
Around 1.6 million complaints have been received in response to these letters, and 97% have been upheld.
"It is clear that a majority of the PPI policies sold have not been complained about," the FCA said.
The regulator said the deadline could "bring the PPI issue to an orderly conclusion, reducing uncertainty for firms about long-term PPI liabilities and helping rebuild public trust in the retail financial sector".
Which? executive director Richard Lloyd said: "It's hugely disappointing that the regulator is pushing ahead with a blanket PPI time limit.
"Instead of rewarding the banks that have dragged their heels over paying out compensation, the FCA should be requiring firms to proactively seek out customers owed money. Relying on consumers to complain, when many were unaware they've been a victim of mis-selling, has clearly not worked."