Consumers could be bombarded with a huge increase in nuisance calls if a proposed time limit for making PPI complaints goes ahead, a watchdog is warning.
Which? also raised fears that firms could drag their heels when paying out compensation claims if an idea for a two-year deadline on mis-sold payment protection insurance complaints is put into action.
The Financial Conduct Authority (FCA) has been consulting on the idea of a PPI deadline. The consultation closed in February and the regulator is considering the responses.
The FCA has previously 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. If the idea gets the go-ahead, the cut-off point could potentially come in 2018.
But Which? said the idea could spark a further increase in nuisance calls about PPI as claims managers look to cash in on the plans.
It said nearly a third of all complaints made to banks about PPI are being brought by claims management companies (CMCs) on behalf of consumers, who charge a fee of up to a third of the compensation offered. Yet people can make a claim themselves for free.
In 2015, there were 32,739 complaints to the Information Commissioner's Office regarding CMCs making nuisance calls about PPI, which is an 85% increase on the previous year, the consumer group said.
Which? said: "It is highly likely that introducing a time-limit for PPI complaints will simply compound these issues and result in a huge increase in nuisance calls from CMCs."
Which? said the PPI mis-selling scandal is far from over and in 2015, over £3 billion was paid out in PPI compensation, and the major banks have now set aside more than £32 billion for payments.
It warned a time limit for PPI complaints would set a "dangerous precedent" and result in banks having little incentive to pay out compensation swiftly and directly to consumers in any future mis-selling scandals.
Before the FCA goes ahead with any proposals for a time limit, Which? wants to see a simpler process for making a claim, with banks required to accept complaints electronically, as well as tighter regulation of CMCs.
Which? executive director Richard Lloyd, said: "The FCA must rethink its ill-judged proposals to introduce a time limit for PPI claims. If banks and other PPI providers had been more proactive, then this whole process would have cost less and driven fewer people to use CMCs.
"The regulator should instead bring forward new proposals so that banks make it more straightforward for people to make a claim without a costly CMC and get back all the money they are rightly owed. We also need to see tougher regulation of CMCs put in place without delay, otherwise nuisance calls will increase as they try to cash in on the regulators plans."
An FCA spokeswoman said: "We are currently considering the responses we received during our consultation and we have made no final decisions yet.
"The consultation process was designed to encourage all stakeholders to share their views so they can be properly considered and the right policy put in place as a result."