Firms should prepare for increase in PPI complaints, says expert, as 2019 deadline confirmed

The Financial Conduct Authority (FCA) has confirmed a deadline of 29 August 2019 for any new complaints relating to historic cases of potentially mis-sold PPI. A two-year consumer communications campaign, funded by financial services firms, will begin in August 2017, the regulator has announced.

The FCA has also published final rules and guidance on how firms should handle so-called 'Plevin' complaints, which may give consumers new grounds to complain about the sale of a PPI policy. As proposed by the FCA last year, firms have been advised that failure to disclose commission of 50% or more on a PPI policy sale should be presumed unfair, and any commission over this 'tipping point' should be repaid to the consumer.

Insurance law expert Jonathan Cavill of Pinsent Masons, the law firm behind Out-Law.com, said that firms were likely to be "disappointed" by the 2019 deadline, which is one year later than the first deadline proposed by the regulator.

"There are also additional considerations for firms arising out of the new rules and guidance relating to 'Plevin' complaints, particularly the requirement on firms to notify previously rejected and eligible customers who have grounds to make a Plevin complaint," he said. "The cost implications could be considerable."

"Practically firms will need to think about the complaints handling processes they have in place, and whether they are sufficient to meet the increase in PPI complaints which they most probably will face. As claims management companies will be losing a valuable income stream, it is likely that they will be more willing to make formal complaints for customers to the Financial Ombudsman Service, even where the merits of those complaints are questionable," he said.

PPI was intended to cover repayments due on loans or credit cards for people who could not afford them due to an accident, unemployment, sickness or death. However, these products were widely mis-sold to customers who in some cases were not told that a policy was optional, or that the policy they were sold did not cover their circumstances.

The announcement means that most consumers who are unhappy about the way that PPI was sold to them will have until 29 August 2019 at the latest to complain to the firm concerned, and to the Financial Ombudsman Service (FOS) if they are not satisfied with the response. Some consumers may run out of time sooner under the usual consumer complaint time limits, including those that have already been informed by their firm that PPI was potentially mis-sold to them. Complaints about PPI policies sold after 29 August 2017 will not be subject to the deadline.

From August, firms will also be required to write out to those whose PPI complaints were previously rejected, but who are now eligible to complain following the Supreme Court's decision in the Plevin case in 2014. The UK's highest court ruled in that case that Paragon Personal Finance's failure to disclose a large commission payment on a single premium PPI policy sold to a client made the relationship between it and the borrower, Susan Plevin, unfair as defined by the 1974 Consumer Credit Act.

FCA chief executive Andrew Bailey said that the deadline and consumer awareness campaign would mean that "people who were potentially mis-sold PPI will be prompted to take action rather than put it off".

"We believe that two years is a reasonable time for consumers to decide whether they wish to make a complaint," he said.

"We have carefully considered the feedback we received and we still believe that introducing a deadline for PPI complaints and a communications campaign warning of the deadline will benefit consumers," he said.