Are the FCA correct in imposing a time limit at the end of August 2019?

Are the FCA correct in imposing a time limit at the end of August 2019?

In Spring 2017, the Financial Conduct Authority (FCA) announced (after a review of what seemed like years) that they were imposing a time limit to bring to a conclusion the Payment Protection Insurance (PPI) claims.  This time limit is scheduled for the end of August 2019.

Who are the FCA?

The FCA are the regulatory body that oversees the vast majority of banks, lending institutions and financial advisers.  They are independent from the government and therefore should be independent from any views and pressures that the government may well impose as a result of lobbying from certain institutions to assist in the running of their business and by reducing the capacity of the FCA to regulate them in whatever shape or form.

Several years ago the head of the FCA took a strict line against the banks and brought in tough regulation.  However, we have seen (as a result of the government’s interference, namely George Osborne) that this has been weakened and the banks have finally been able to put their influence in place to bring about a conclusion of the PPI scandal.

The banks

The banks and other lending institutions that mis-sold PPI have been lobbying hard both at government level and through the FCA in order to bring about a conclusion to the PPI scandal.  It came as a huge surprise to many people that 80% of PPI policies have yet to be claimed and therefore, it is not surprising that the banks want to draw a line under this because, just working from the figures that we do know, that would mean the banks’ potential liabilities are around £120billion if all of these people came forward.

The banks wanted to conclude the PPI scandal early but the FCA has held out a little bit.  Rather than the 2018 deadline that was originally proposed, it has now moved the deadline to the end of August 2019.  The banks use a huge amount of pressure at government level and, in particular with the Chancellor George Osborne, who unsurprisingly has gone on to become a spokesman for financial institutions around the World which has helped them stop the haemorrhaging that they have suffered from the PPI scandal.

The Consumers

The consumers are the other side of this argument.  When consumers were taking out PPI (whether they knew about it or not) they did not realise that the policy itself was a complete waste of time.

It was extremely expensive and inappropriate in so many different cases.  The PPI itself was applied to loans, credit cards, mortgages and so on in an ad-hoc way and this was mis-sold in a variety of ways, from just being put onto the facility without the consumer’s knowledge through to being put on the facility with the consumer being given no option but to take it if they wanted the finance.

The best way that the banks could have dealt with this was to write to all its consumers with PPI policies and ask them to complete paperwork to see if a complaint and mis-sale was appropriate.  Each individual policy would have been addressed and looked at and, whilst this may have taken some time, that would have been the only fair way.

However, the banks have not needed to do that and the consumers themselves have been left in a position where they (or 80% of them) are now potentially going to miss out on a refund of PPI which could have been mis-sold to them in the past.

PPI mis-sale: The facts

  1. 80% of PPI purchased has remained unclaimed.
  2. You can look at PPI policies which are over 6 years old.
  3. You can look to see if you have had PPI, regardless of whether you have any paperwork.
  4. You can see if you have had PPI even without an account number.
  5. You do not need to know whether you have had PPI in the past. It can be checked for free.

Is that it for PPI?

The regulator will be putting into place the time limit in August 2019 where new claims cannot be taken on in relation to the mis-sale of PPI.

Is this going to be the end of PPI?

The honest answer is no, because of course those claims which were submitted prior to August 2019 are going to take up to around 2 years to deal with so this is likely to run into the years 2020/2021 and possibly further.

In addition, there is a question mark over the validity of the time limit being put in place.  Is it right or correct?  Can it be challenged?

Not only that, the application for PPI can be looked at as potentially fraudulent, in that the banks and members of staff have knowingly mislead consumers to take a policy for their financial gain or the financial gain of the organisation that they work for.  Basically, if you look at it from this perspective, it is potentially fraudulent.

The FCA does make mention of this in their report in imposing a time limit.  Therefore, there is a question mark (and one that we are keen to explore at a later date) that we could look at PPI but on the basis of a fraudulent payment being taken from a consumers account and not necessarily as a mis-sale.  However, this remains to be seen.

Don’t delay – get your PPI claim in

The most important thing is that if you have had any form of borrowing in the past, whether you have paperwork or not, whether you know the account number or not or whether you whether PPI was applied or not, regardless of how long ago – you must put a claim in to see if PPI was applied in the first place and then, if PPI was found and applied, look at obtaining a refund by way of mis-sale.  All of this we can do on a no win no fee basis.


Martin Knipe