PPI claims cut-off point considered

Jan 18 2013

The City watchdog has confirmed it is in talks with banks about potentially imposing a cut-off point for people to complain about payment protection insurance (PPI) mis-selling.

The Financial Services Authority (FSA) said it had been approached by the British Bankers' Association (BBA) to discuss the potential for a time limit in return for the banking industry funding widespread advertising to raise awareness and ensure people know how to complain.

Reports have suggested the deadline could be as early as May 2014 but a spokeswoman for the FSA said that no time limits have been pencilled in at this stage and discussions are still in their very early stages.

The FSA said it would need to be convinced that the proposals are in consumers' best interests before anything like this were to happen. There will be no changes to its rules without a full public consultation, said the FSA.

About £13 billion has been put aside by financial institutions to compensate customers for mis-sold PPI policies and the scale of the scandal continues to spiral beyond expectations.

The FSA's statement said: "Our key priority is to ensure consumers are protected, so the FSA board would need to be convinced that any proposals would be in the interests of consumers. We have had initial discussions and are prepared to consider the merits of this and other options. A key consideration will be the potential to get compensation to more consumers, more quickly."

The statement said the FSA will continue to hold discussions with the BBA as well as talking to consumer groups. It said: "No changes to existing FSA, or future Financial Conduct Authority (FCA), rules would take place without a full public consultation."

Condemnation came from consumer groups as speculation mounted over the proposals earlier this week. Martin Lewis, creator of MoneySavingExpert.com, said previously that it would be "immoral" to put a deadline in place as early as next summer.

He said: "It's likely that as few as one in five eligible customers have actually reclaimed. This money was wrongly taken from people, due to systemic selling and, on some occasions, downright deceit. That went on for over a decade. People should have at least as long as that to get their money back."

Standard statute of limitations rules state that consumers can claim compensation up to six years after the date they were sold a product. But they are also eligible to claim compensation for up to three years after they first became aware that they were mis-sold a policy.