Directors of Britain’s financial regulator are meeting to decide whether or not to set a deadline for future PPI claims.
It is understood the possible time bar will be discussed at a scheduled board meeting of the Financial Conduct Authority (FCA).
Mark Kleinman, City Editor of Sky News, says: “Directors of the City regulator will hold crunch talks later about the imposition of a deadline which would draw a line under the £25 billion payment protection insurance mis-selling scandal.”
Then meeting comes four months after the FCA revealed the possibility of a tidal wave of new claims following the landmark Plevin ruling in the Supreme Court last year. The court ruled that PPI would be mis-sold if the consumer was not warned about the size of commission paid on the sale of their policy.
Bankers have claimed the implications of the ruling could be catastrophic for the industry. An independent study from Autonomous Research has projected that the high street banks could face a £33 billion compensation bill if the ruling is extended to other financial products.
The banks have already paid out £20.8 billion since January 2011 for mis-sold PPI with a further £5 billion currently set aside to pay out future successful claims. Despite a slowdown in volume, new claims continue to pour in at the rate of tens of thousands a week.
Over the years the banks, notably Lloyds and Clydesdale, have been fined millions of pounds for mishandling PPI complaints.
Lloyds were fined £4.3 million in February 2013 for delaying payments on successful claims. They were also hit with a record £117 million fine in June this year for mis-handling PPI claims. The fine was five times higher than the previous record penalty handed out to Clydesdale Bank who were fined £20.7 million for ‘serious failings’ in the way they had handled PPI complaints.
Past incidents and the volume of rejected complaints which were later by the Financial Ombudsman Service (FOS) prompted the FCA to launch a thematic review of the way in which lenders have been handling PPI complaints.
The focus of the review has been ‘whether the current approach is continuing to meet its objectives of securing appropriate protection for consumers and enhancing the integrity of the UK’s financial system.’
In May they announced they would be taking the Plevin decision into account and that they would also be considering the banks’ plea for a deadline to be placed on future PPI claims.
The announcement said the regulator ‘is considering whether additional rules and/or guidance are required to deal with the impact of the Plevin decision on complaints about PPI.’
The banks have been lobbying for a deadline for years. The issue was first raised after they lost the High Court judicial review in the spring of 2011.
In 2013 they formally lobbied the then regulator, the Financial Services Authority (FSA) to try to establish a deadline by the spring of 2014. The bid failed in the face of vocal opposition from consumer groups who argued it risked depriving customers of legitimate redress for a mis-sold product.
Their hopes were raised recently when Chancellor George Osborne said he was keen to draw a line under PPI claims with talk of ‘a new settlement’ between the industry and its regulator.
An immediate announcement on whether or not a time bar will be introduced is not expected and the proposal is expected to go for consultation before being ratified.