In our blog post “Shift towards a PPI cut-off deadline reported” (24 June), we explained that internal documents had revealed that the FCA was backing a call by banks for the introduction of a two year cut-off for new PPI claims.

The official FCA announcement was made on 2 August 2016. It confirmed that the FCA considers that its package of proposals regarding PPI complaints (as set out in the FCA’s November 2015 consultation) should be taken forward. The proposals included setting a deadline for bringing new PPI complaints, and a communications campaign to bring the proposed cut-off deadline to consumers’ attention.  It has been suggested that the consumer communication campaign could cost up to £42 million, which is likely to be shouldered by the banks.

Before making a final decision on the package of proposals, the FCA is “consulting on changes to the proposed rules and guidance concerning the handling of PPI complaints in light of Plevin” (the Supreme Court decision in Plevin v Paragon Personal Finance Ltd [2014] UKSC 61).

The proposed changes to the rules and guidance concerning the handling of PPI complaints were flagged by the FCA following responses received to its November 2015 consultation. They relate to three key aspects of the current rules and guidance:

  • to include profit share in the FCA’s approach to assessing fairness and redress;
  • to allow rebates received by a consumer when cancelling their PPI policy to be partly reflected in any redress due (reducing the redress); and
  • clarifying how firms should assess redress where commission or profit share rates varied during the life of the PPI policy.

Consultation on these proposed changes will close on 11 October 2016. If after that the FCA makes the final decision to proceed with the package of proposals, it has said it anticipates that:

  1. guidance concerning the PPI deadline, who is to meet the cost of the consumer communications campaign fee, and how changes to the handling of PPI complaints post-Plevin, will be published before the end of December 2016;
  2. any changes to the rules and guidance post-Plevin would come into force by the end of March 2017; and
  3. the rule setting the PPI cut-off deadline would come into force by the end of June 2017, with the consumer communication campaign starting at the same time, meaning a cut-off deadline in June 2019.

This delay could force Banks to set aside yet further funds to cover claims made during this longer than anticipated period. At least it now looks like final clarity on the matter can be expected before the end of 2016.