The Financial Conduct Authority (FCA) released a statement on Payment Protection Insurance (PPI) on 2 October 2015. It outlines its intentions following the seminal decision of the Supreme Court in Plevin –v- Paragon Personal Finance Limited (Plevin).
The FCA will consult on a number of proposals, including:
- A deadline by which consumers must make their complaint falling in spring 2018;
- An FCA led communications campaign to raise awareness of the possibility of making a complaint before spring 2018; and
- Proposed rules and guidance in respect of the handling of PPI complaints following the Supreme Court’s decision in Plevin.
The FCA will consult on rules for the handling of PPI complaints following the Plevin judgment concerning a claim under s140A of the Consumer Credit Act 1974, known as the unfair relationships provisions. It involved the non-disclosure of the level of a commission on a PPI sale. The proposed deadline would also apply to the handling of these complaints.
The proposed rules and guidance would only apply to PPI complaints where a claim could be made against the lender under s.140A. That means that a sum must have been payable (or capable of becoming payable) under the credit agreement (which the PPI covered or covers) on or after 6th April 2008.
It appears as if the proposed rules and guidance would not require firms to consider previous or existing PPI complaints further and so would not lead to the payment of further redress where the PPI complaint is upheld under the current PPI complaint handling rules, and full redress paid.
The FCA says that the proposed rules and guidance would however be relevant where:
- The complaint would be rejected by the seller under existing PPI complaint handling rules and guidance; or
- The seller would conclude that paying alternative redress was appropriate in respect of some single premium PPI; or
- The complaint is made against a lender that did not sell the PPI to the customer.
The rules will likely say that a firm should presume that a failure to disclose a commission of 50% or more gave rise to an unfair relationship under s.140A. This presumption, the FCA indicates, may be set aside in certain limited circumstances and further details are awaited as to what these circumstances are to be.
Amount of Redress
The FCA has indicated it will consult on the key elements of redress in s.140A commission claims being:
- The difference between the commission the customer paid (e.g. 72% of the premium as in Plevin) and 50% of the premium paid; plus
- The historic interest the customer has paid on that proportion of the premium; plus
- Annual simple interest on the sum of 1 and 2.
Watch this Space
The FCA will publish its consultation, it says, before the end of 2015.