Firms must re-contact certain previously rejected PPI complainants by end April

The regulator has published final guidance clarifying its approach to complaints involving regular premium PPI where the ongoing premium payments included an element of commission which was not disclosed, following on from its consultation of November 2018. The new guidance requires firms to assess whether or not repeated commission payments were disclosed to the customer on an ongoing basis and not merely at the point of sale; and whether customers should be compensated for this.

Individuals whose complaints involving regular premium PPI were rejected when assessed on the previous guidance must now be re-contacted, telling them that they can make a new complaint and reminding them of the 29 August 2019 PPI complaints deadline. Firms must complete these mailings by 29 April 2019 at the latest, four months before this deadline.

The FCA published its first set of rules for handling disclosure of commission complaints around sales of regular premium PPI in 2017, in response to a 2014 Supreme Court decision on the relationship between PPI premiums and commission payments. That case, Plevin v Paragon Personal Finance ('Plevin'), considered whether failure to disclose a large commission payment at the point of sale made the transaction unfair under the 1974 Consumer Credit Act (CCA).

In its November consultation, the FCA noted that some firms had been rejecting complaints involving undisclosed commission for restricted credit PPI sold before 6 April 2017 as being "outside the jurisdiction" of the complaint-handling rules. It was therefore amending the rules to reflect its view that the payment by the customer of commission on subsequent premium payments may amount to a "thing done (or not done) by, or on behalf of, the creditor, either before or after the making of the agreement", which may make the relationship unfair under the CCA.

The FCA anticipates that around 150,000 consumers will receive letters as a result of its changes. This includes an estimated 10,000 people who were previously told that the amount of undisclosed commission they were charged did not create an unfair credit relationship; and an estimated 140,000 people whose claims were rejected as out of jurisdiction.

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. A 29 August 2019 'longstop' deadline now applies to complaints that would not otherwise be time-barred by virtue of the usual statutory limitation period.