Making a claim for mis-sold payment protection insurance (PPI) seems to have been around for ages; however, the Financial Conduct Authority (FCA) is now putting its brakes on the issue, declaring a spring 2018 deadline for any outstanding complaints.
The countdown begins
As one of the biggest financial scandals of recent years, the mass-sale of PPI prompted the FCA to make sweeping changes to the rules regarding this infamous insurance.
As part of the consultation, a campaign to raise awareness about the changes, paid for by financial services firms, is to take place. According to Insolvency News, a deadline and communications campaign will bring the PPI issue to an orderly conclusion. This will also help to reduce uncertainty for businesses about PPI liabilities while rebuilding public trust in the retail financial sector.
A high price to pay
Although the FCA hopes a high-profile campaign will prompt the remaining claimants into action, it comes with a hefty price tag. It is believed that around 18 financial firms, which receive 90% of all PPI complaints, will have to foot a £42m bill for the campaign.
Despite this, the FCA believes the deadline will give consumers the opportunity to pay off expensive debt and resolve their IVA issues; for example, they may choose to explore an IVA through Carrington Dean or another debt solutions provider.
A better process going forward
Although imposing a deadline is a positive step forward to resolving the PPI issue, some industry insiders are cautious about the upcoming process.
Consumer group Which? argues that a two-year time limit may reduce the incentive for banks to pay out compensation quickly in any similar future scenarios.
According to the Guardian, it is evident that banks should improve their PPI complaint-handling processes by making them fairer and simpler. Experts argue that the process for making a PPI claim should be made easier before a time limit is imposed. There is also a call for tighter regulation regarding claims management companies, especially those that flout the rules relating to making nuisance calls.
The FCA would also like to see information published with regard to how financial firms have handled complaints so far and how many cases are outstanding. In this way, it can ascertain how successful the time limit will be in achieving the desired outcomes.