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ombudsman news

issue 141

August 2017

PPI – latest update

On 29 August 2017, the FCA’s new rules and guidance for PPI complaints come into effect – beginning a two-year timeframe for complaining about mis-sold PPI. Richard Thompson, principal ombudsman and quality director, gives an update on what’s been happening at the ombudsman in the run-up to this date.

in your recently-published annual review, you said there was ongoing uncertainly around PPI. Why was that?

When we published our annual review, the FCA had recently published its new PPI rules and guidance – and said there’d be a two-year deadline for complaining about mis-sold PPI. This all followed a Supreme Court judgment in late 2014, in the case of Plevin v Paragon Personal Finance Ltd. The judgment, and the FCA’s rules, deal with a number of complex issues. But basically, what it all means is that some people may have a reason to complain – based on the amount of their PPI premium made up of commission and profit share, and whether this was disclosed by the lender. It also depends on the type of credit the PPI was sold with, and when it was taken out and ended.

The FCA needed to consider what Plevin meant for future PPI complaints, which involved consulting on new rules and guidance. While the consultation process was ongoing, we worked hard to meet our commitment of giving everyone who’d complained to us an initial answer about whether we thought their PPI policy had been mis-sold. It did mean though that we didn’t finally resolve as many PPI complaints we would have otherwise – so we ended the financial year 2016/2017 with around 170,000 PPI complaints, of which 140,000 were affected by the Plevin judgment.

what’s the position now?

In the last three months, we’ve received a further 20,000 or so complaints about PPI – and there are now around 150,000 complaints waiting for the answer they need from us about Plevin.

Since the FCA’s announcement this March – and the greater certainty that brought – we’ve seen financial businesses focused on getting ready for the new rules and guidance. And at the ombudsman service, we’ve been making sure we’re in a position to move things forward as quickly as we can – both for people who’ve already contacted us, and those who might do in the future.

For example, the FCA’s Plevin rules say that if commission and profit share made up over half the cost of someone’s PPI policy, then they should be refunded the difference. So we’ve been talking to businesses to make sure they’re clear about the information we’ll need from them.

We’ve also been making sure we’re ready for the FCA’s upcoming communications campaign, which will run up until the complaints deadline of 29 August 2019. This is funded by a levy on the 18 of the largest financial businesses – and is intended to prompt consumers to check if they might be affected by PPI mis-selling. But it’s still the case that we don’t know exactly how many people will decide to complain, and at what point in the next two years they might do so. Apart from the FCA’s deadline, other time limits apply to complaining. So it’s important people check their own situation and get things started if they think there’s a problem with their PPI – rather than waiting to do so till just before the deadline.

In the meantime, we’ve been making sure we’re geared up to deal with what’s likely to be a significant increase in demand. We’ll also be updating our website to reflect all the latest developments – and to make it easier for people concerned about PPI, and for businesses handling complaints, to find the information they need from us.

Also, as part of the FCA’s response to Plevin, it’s told businesses they need to write to some customers whose complaints were originally rejected, but who could now complain about the issues raised in Plevin. By the FCA’s estimate, that could be 1.2 million people – but there’s uncertainty around how many people will go onto complain, how many complaints businesses will be able to resolve themselves, and how many will need our involvement. In addition, we don’t yet know how far claims management companies are going to ramp up their activities around PPI.

do most PPI complaints still come to you through claims management companies?

Yes, it’s still a majority of PPI complaints – over eight in ten at the moment. We’ve always highlighted that it’s easy and free to complain directly – to businesses and to us. But the reality is that, in the past, it’s often been text messages and ads from claims managers that have prompted many people to complain about PPI.

Claims management companies have a regulator and have a clear code of conduct. What’s most important is that the consumer involved gets an answer about their PPI as soon as possible – which means claims managers working cooperatively with us to provide the information we need.

so what are the next steps for PPI at the ombudsman?

We’ve been keeping in touch with people who are waiting for our answer about what Plevin means for their PPI complaint – and we’ll move things forward as soon as we can. We’ll need to look at the particular circumstances of each individual complaint to let people know exactly where they stand.

Longer term, it’s clear we’re still going to be dealing with PPI for some time. As I’ve said, people who think they’ve got a complaint have until 29 August 2019 to let the business know – though other time limits may apply, so it’s best to act sooner rather than later. If people then have six months from the business’s final response to contact us, that takes us into 2020 and beyond. Between now and then, we’re likely to be very busy.

In the autumn, we plan to use ombudsman news to share some of our early insight into what we’ve been seeing since the new PPI rules have been in place. And we’ll obviously carry on talking to all our stakeholders – so we’re all working together to draw an important final line under PPI as quickly, fairly and efficiently as we can.

Image: Richard Thompson
Richard Thompson
principal ombudsman and
quality director

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