Few financial cases have been as well publicised as the now infamous case of Plevin vs. Paragon. This legal battle sparked a PPI whirlwind and prompted consumers across the UK to launch cases protesting mis-sold loan insurance. On Tuesday 2nd August, the Financial Conduct Authority (FCA) issued an update surrounding regulatory changes, triggered by the enormous influence of the Plevin case.
Following feedback off the back of a consultation paper published in November last year, the FCA has now settled on a proposal package regarding PPI complaints. These proposals aim to bring about a definite and satisfactory conclusion to the PPI issue, by addressing the following:
Commission: profits made from the sale of PPI policies will be readdressed and included within the framework of what constitutes fair consumer treatment, as large profit shares cultivate an unfair relationship between the lender and client.
Rebates: refunds made to customers upon cancellation of a PPI policy will be taken into consideration when calculating redress for a complaint, likely leading to reduced redress amounts.
Varying commission rates: new regulations will clarify how to ensure fairness and calculate redress in situations where commission rates or profit shares have varied throughout the duration of the PPI policy.
The FCA is also introducing a time-line: firms will only have to accept PPI mis-selling complaints for two years following the enforcement of the new rules (this deadline applies to complaints only and not to court action). This is likely to be decided by the end of the year. Once these regulations have been finalised, the FCA will launch a nationwide communications campaign to make consumers aware of the new deadline, with a particular emphasis on reaching vulnerable customers.
What can you expect?
These timings are subject to change as a result of further consultation but serve as a good indication of how it stands at the moment. So, now is the time to organise your documents for each PPI case, whether redress was provided or not. It’s likely that firms will receive new complaints from customers who have already complained: these must be treated as new complaints.
If you would like to discuss the latest developments and how this may affect your organisation’s current and future resourcing requirements – please feel free to give me a call on (01273) 651 500 or contact me via email.
This post was adapted from an announcement by the FCA on 2nd August 2016. For the full FCA article and to find out more – click here.