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FCA update on PPI complaints proposals

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29/09/2016

Walker Morris has reported regularly [1] on the Financial Conduct Authority’s (FCA) consultation proposals for the handling of Payment Protection Insurance (PPI) complaints generally and for dealing with industry uncertainty following the Supreme Court’s decision in the Plevin case [2] that non-disclosure of a significant amount of PPI commission earned by a lender created unfairness in the lender/borrower relationship.

The FCA has now confirmed [3] its belief that its package of proposals laid out in November 2015 should be taken forward. The package includes imposing a deadline for making new PPI complaints and launching a consumer communications campaign to raise awareness.  The FCA also intends to make rules and issue industry guidance on handling PPI complaints in light of the ‘Plevin problem’.

The FCA is now consulting on some changes to the proposed rules and industry guidance, in particular concerning:

  • the inclusion of profit share in the FCA’s approach to the assessment of fairness and redress;
  • allowing previous rebates to a consumer on cancellation of a PPI policy to be partly reflected in (and so reduce) any redress due;
  • clarification of how firms should assess fairness and redress where commission or profit share rates vary during the life of the PPI policy.

The FCA’s further consultation will close on 11 October 2016 but Andrew Bailey, chief executive of the FCA, has already indicated that, if the FCA does decide to proceed with the proposals, it is anticipated that:

  • rules and guidance on: the deadline; the consumer communications campaign (including a new rule regarding the funding of this campaign by the firms with the most PPI complaints between them); and PPI complaints and the Plevin issue will all be made by the end of December 2016;
  • the Plevin rules and the fee rule will come into force around 3 months later, to allow firms time to prepare for and implement the new provisions;
  • the rule setting the complaints deadline will come into force by the end of June 2017, with the consumer communications campaign starting at the same time; and
  • the deadline will then fall two years after the deadline rule came into force.

Walker Morris will continue to update on developments, but if you would like any further information or advice in the meantime, please do not hesitate to contact a member of the team.

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[1] Access our earlier briefings here.
[2] Plevin v Paragon Personal Finance Limited [2014] UKSC 61
[3] Visit the FCA website for further details.

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