New PPI Rules Take Effect

Important new rules and guidance are being introduced by the Financial Conduct Authority, which affect how banks and other financial services providers must handle customer complaints relating to the sale of Payment Protection Insurance (PPI).

PPI was usually sold with other products such as a loan, credit card, store card, mortgage, overdraft, or car finance deal.  And while many consumers, who feel they have a complaint over PPI, have been in touch with their provider, the Financial Conduct Authority (FCA) has launched a major campaign to publicise the deadline of 29 August 2019 for people wishing to make new PPI-related complaints.

This includes highlighting a new rule where a complaint can be made based on the amount of commission charged if this wasn’t disclosed to the customer when they first purchased their policy.  This arises from a ruling by the Supreme Court in November 2014, which stated that the failure of the lender to tell the consumer about high commissions was unfair.

As a result, the FCA has created a 50% commission ‘tipping point’ rule.  This means that where undisclosed commission was greater than 50% of the premium paid for PPI, the firm should presume its relationship with the policy holder is unfair and, as a result, pay some of that money back to the customer.

In addition, the FCA also requires providers to write to anyone who previously had a PPI complaint rejected if that customer now has grounds for a refund of their commission in light of this Supreme Court judgement.

In setting out its new rules, the FCA has confirmed a deadline for making new PPI-related complaints. Whether it’s a claim over how the policy was originally sold, or one regarding undisclosed commissions, consumers will have to submit their complaint to the firm in question by 29 August 2019.

Anything received after this point won’t be considered, unless it relates to a policy sold after 29 August 2017.

To help raise awareness, the FCA is, as mentioned, embarking on a major consumer communications campaign, which will continue up until the 2019 deadline date.

The FCA has said the deadline is designed to prompt people into action rather than putting off making a complaint and considers this two year period a reasonable time span for consumers to decide whether or not to complain to their provider.

If you want further details on PPI and how to make a complaint, you find out more here.

View plain text version

You may also be interested in: