FCA sets commission ‘tipping point’ for PPI complaints as new deadline imposed

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The FCA has said that firms that sold payment protection insurance at more than 50 per cent commission should assume that the practice was unfair.

The regulator today said that the final deadline for making a new PPI complaint will be 29 August 2019 as it offered  guidance around how firms should handle complaints after the Plevin v Paragon Personal Finance Ltd decision in the Supreme Court.

The Plevin decision means that consumers might have new grounds to complain about PPI based on the amount of money providers got for the sale if they failed to disclose commission.

A statement from regulator says: “As proposed, the FCA’s approach includes a 50 per cent commission ‘tipping point’ at which firms should presume, for handling PPI complaints, that the failure to disclose commission gave rise to an unfair relationship, and that profit share should be included in firms’ calculation of commission. Redress will be calculated as the excess commission over the 50 per cent tipping point.”  

The FCA is also requiring all firms to write to previously rejected complainants who are eligible to complain in light of Plevin to explain the new basis for complaining.

The rules surrounding Plevin will come into effect at the same time as the deadline rule – not three months before as originally planned.

Consumers with live PPI policies will now be able to complain after the deadline if they have a future claim on their policy rejected for reasons related to the sale.

The complaint must be related to the reason the claim was rejected, for example, eligibility, exclusions or limitations.

Complaints about PPI policies sold after 29 August 2017 are not subject to the deadline.

FCA chief executive Andrew Bailey says: “Putting in place a deadline and campaign will mean 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.”

Bailey says: “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.”