This page explains our approach to complaints brought against financial businesses by either a consumer or a claims management company (CMC) acting on a consumer’s behalf.
PPI - deadline has now passed
The deadline for consumers to make a complaint to financial businesses about mis-sold PPI was 29 August 2019. Now the deadline has passed, consumers can no longer submit a complaint about mis-sold PPI, unless the PPI policy was sold after 29 August 2017 or their complaint is about a claim being turned down by an insurer. They may also be able to make a complaint if they can clearly show that there have been exceptional circumstances that meant they couldn't complain in time. You can read more about exceptional circumstances in our guidance on time limits.
In October 2019 the FCA issued a complaints handling update, about the unprecedented number of enquiries and complaints businesses have received, and their expectations for complaint handing for both business and CMCs. You can read more on this in the Handling a complaint like this section of this page.
If you have any questions about the deadline, or need some more guidance, call our technical desk.
Types of complaint we see
Most complaints we see are from people who think they’ve been mis-sold PPI. Consumers might complain about mis-sold PPI if:
- they didn’t know they had it
- they thought it was compulsory but didn’t want it
- they weren’t eligible for the policy
- they think the cover and its significant limitations or exclusions weren’t properly explained
- they think the policy wasn’t suitable for them
- they think the costs involved weren’t properly explained to them
Complaints about commission, and Plevin
We also see complaints from people about commission. In cases where commission made up over half of the PPI cost, and this wasn’t made clear, the consumer could be due compensation. People can complain about commission if:
- they took out the credit the PPI was sold with (for example, a loan or credit card) on or after 6 April 2007
- they took out the credit the PPI was sold with before 6 April 2007, and it was still running on or after 6 April 2008
In cases we’ve seen where a consumer’s credit falls within these dates and the consumer wasn’t told they were paying more than half the premium in commission, our ombudsmen have typically decided that the fair answer is to give back the bit of the commission that was over half the premium.
What we look at
This will depend on the case, but we’ll usually consider whether:
- you made it clear that a policy was optional
- your customer was eligible for the policy
- you advised the customer to take out the policy, and if that advice was right for them
- you clearly explained or highlighted any important limitations of the policy
- the policy’s costs and benefits were made clear to the consumer
We’ll normally ask for evidence and information from both you and your customer to work out how the policy was sold. This might include:
- what you and your customer say about what happened
- documents from the time of the sale
- information about the sales process
- any screenshots of internet applications
- sales scripts and staff-training material
Here’s a bit more detail about what we look at:
Was the consumer eligible for the policy?
All PPI policies have “initial eligibility criteria” that a consumer has to meet. If they didn’t meet the criteria when they took out the policy, they would never have been able to make a successful claim.
The most common types of eligibility criteria we see are:
- age – some policies say the policyholder must be within a certain age group, usually between 18 and 65, at the time they take out the policy. It might also say they must not be over a certain age at the end of the policy term
- employment – some policies require a consumer to be working for a minimum number of hours a week when they take out the policy. Sometimes a policy is less specific, and a consumer simply has to be working at the time they take out the policy
- residency – some policies say a consumer should be resident in a specific country (usually the UK) when they take out the policy
We’d expect you to have highlighted the criteria to your customer and to have made sure they were eligible to take out the policy – for both advised and non-advised sales. We don’t think it’s fair for you to have sold PPI to someone who wasn’t eligible to claim.
Did you make it clear that the policy was optional?
Some people say that they:
- were pressured into taking out PPI
- didn’t agree to take out the policy
- didn’t know the policy was optional
We expect you to have made it clear to your customer that the PPI policy was optional – and to have got their consent before adding PPI to a loan or credit card. We’ll look at whether you used language that made it clear to a customer that:
- the policy was optional
- it was a separate product to the loan or credit card
- their decision to take it out would have no impact on getting a loan or credit card
We’ll also look for other evidence to help us decide whether the policy was presented as optional. For example, did the consumer agree to the policy before you added it the loan or credit card? And was the cost of the policy set out separately to the credit? On the other hand, did you say or do anything to undermine an earlier message that the policy was optional?
Did the consumer have to opt in or opt out?
If your customer filled out a form it might have required them to actively do something to say they wanted PPI. For example, they might have had to tick a box on an application form.
However, some forms ask people to “deselect” or “opt out” of PPI – usually by ticking a box if they didn’t want PPI – which often wasn’t made very clear. We don’t think this is fair – if the customer did nothing, it would look like they chose to have PPI, which might not be true. So in this case, we’d probably say the policy was mis-sold
Some consumers say they felt they had to take out PPI to proceed with their loan or credit card application.
In these cases, we’ll work out whether you said or did something that made them feel they had no choice about taking out the policy. This might be a recording of the phone conversation between you and your customer. If there’s no recorded evidence, we’ll ask each side to tell us what happened, as well as looking at any relevant sales scripts.
If evidence shows your customer was pressured into taking out the policy, we’ll usually decide that the policy was mis-sold.
Did you clearly explain or highlight any important limitations of the policy?
When you sold the policy, we’d expect you to have clearly highlighted any significant exclusions or unusual terms, for example, those relating to:
- claims for sickness caused by a pre-existing medical condition
- unemployment claims for consumers who are self-employed or have a different employment status
- what the consumer might get back if they cancelled a single-premium policy early, and
- any mis-match between the term of the policy and the loan.
If you didn’t clearly explain or highlight the significant exclusions or limitations, we’ll consider whether this affected the consumer’s decision to take out the policy. That is, would the consumer have chosen to take out the policy if it had been properly explained to them?
Many PPI policies we see contain exclusions or limitations to the unemployment cover provided to:
- self-employed people
- company directors with shares in the company
- temporary/fixed-term contract workers
- casual workers
- people who are employed by a relative
We’d expect you to have brought your customer’s attention to any particularly unusual terms before they took out the policy – even if you didn’t make a recommendation – for example, if cover wasn’t valid because the customer was self-employed. If you didn’t, we’re likely to uphold a complaint.
If we find you only told your customer to read the policy’s terms and conditions, we’re unlikely to agree that this was enough to make it clear to them.
A customer may have given you false information about their employment status. If they knowingly withheld this information, we probably wouldn’t uphold their complaint. But if they didn’t tell you about their employment status because you hadn’t told them it might be important, we’re more likely to uphold their complaint.
In cases involving single-premium policies, we’d expect you to have made your customer aware of the following:
- The total cost of the policy – you should have explained the amount of the single-premium, the amount of interest it could attract and the possible total cost.
- The interest-bearing loan that would pay for the policy.
- The monthly cost of the policy.
If you didn’t make your customer aware of the total cost of the policy before they took it out, we’re likely to say you mis-sold it to them.
We see cases where a consumer was only told about the total cost of a policy after they’d agreed to take it out – but was later given an opportunity to reconsider whether they wanted the policy or not. In these cases, we may decide you’d done enough to bring the total cost to your customer’s attention before they committed to taking out the policy.
If the sale was online, we’ll look for evidence that you made your customer aware of the total cost before taking out the policy. This could have been during the sales process – for example, if they had to select an option to say they’d read certain information before they were able to proceed.
Were the costs and benefits of the policy made clear to the customer?
We’ll look at how clearly you explained the cost of the policy and the benefit your customer would receive if they made a successful claim. To do this we’ll consider:
- how the costs and benefits were communicated
- whether it was made clear that the customer would have to continue paying the policy premium during a claim
We’re likely to uphold the complaint if we think you didn’t explain this clearly enough and it affected the customer’s decision to take out the policy.
Did you advise the customer to take out the policy, and was that advice right for them?
You could have sold PPI on an advised or non-advised basis through any sales channel. Sometimes it will be obvious whether the sale was advised or non-advised – postal and online sales are usually non-advised, for example.
If you made a recommendation to a customer, we’ll look for evidence that you identified and considered their needs to make a suitable recommendation for them.
In cases involving advised sales, we’ll consider:
- who the policy was set up to cover
- any pre-existing medical conditions
- the customer’s employment status
- the cost and benefits of the policy
Sometimes a business can’t make a fully suitable recommendation. Where this has happened, we’d expect you to have highlighted any potential risks in your recommendation, so your customer could make an informed decision about whether to take out the policy. This is sometimes referred to as “advice with caution”.
If you sold a single-premium policy, we may also consider:
- the customer’s need for flexibility
- the affordability of the policy
- any “term mismatch” – where a policy doesn’t cover the customer for the full term of the loan or credit it’s attached to
If we decide you made an unsuitable recommendation or didn’t clearly highlight any shortcomings in your recommendation, we’ll consider whether your customer would have taken out the policy if they’d known it wasn’t suitable for their needs.
Handling a complaint like this
In the run-up to PPI deadline, businesses saw a significant increase in PPI enquiries and complaints. The FCA issued a complaint-handling update on 16 October 2019. It said that owing to the unprecedented number of enquiries and complaints financial businesses had received it’s unlikely consumers will get a final response within the usual 8 weeks (see DISP 1.6.2R for the detail of the rule).
The FCA has challenged financial businesses to deal with these complaints as quickly as is reasonable, given the very large volumes. It has also written to claims management companies to remind them of what they expect from claims management companies (CMCs) when acting for their PPI customers.
Your final response
In its update, the FCA said that financial businesses should tell consumers when they could expect a final response to their complaint.
In your response, you need to clearly explain how your decision has been made for that individual customer. As well as the information we’d normally expect you to write in your final response letter, you should include:
- details of the customer’s circumstances at the time of sale
- how the policy was sold and whether or not it was advised
- the type of PPI policy that was sold and whether it was attached to any loans, credit cards or any other type of credit
- the cost of the policy
- the benefit for the customer if they had needed to claim
- why you think you’ve treated the consumer fairly – for example, that any advice you gave was suitable for the customer given their circumstances
If you don’t include this information in your response to the customer or CMC, it’s more likely that they’ll refer the complaint to us.
If you receive a complaint from a CMC on behalf of a customer, you should liaise with the CMC to resolve the complaint, rather than directly with the customer.
Claims management companies (CMCs)
We expect CMCs to work with businesses to resolve complaints. This includes applying the “8-week rule” sensibly before bringing it to us, as it may well be in the consumer’s best interests to give the business more time to respond.
We may decide that a complaint has been brought to us without the business being given a reasonable opportunity to respond. At the moment, we expect CMCs to bear in mind the current challenges businesses are facing as they work through the high volume of PPI enquiries, and not bring cases to us too soon.
If this happens, and where we think it’s in the customer’s best interests, we’re likely to return the case to the CMC, and to ask the business to get in touch with the CMC directly to discuss timings and the best way to resolve the complaint.
When we get involved
If your customer is unhappy with your answer to their complaint, they can ask us to look into it. They have 6 months to bring complaints to us from the date you respond. Please note that the FCA deadline only applies to customers bringing complaints to a business – they are still able to refer a complaint to us after this deadline (provided the complaint was made to the business in time).
We’ll tell you when a complaint has formally been referred to us and ask you to complete a business response form. The form needs to be fully completed and returned to us in the time we specify, along with any supporting evidence for the individual case.
The form will need to be completed even if:
- you’ve made an offer to the consumer
- you don’t think the complaint is within our jurisdiction
- you dispute that a PPI policy was sold
Read more about our general approach to handling cases.
Putting things right
If we think you’ve done something wrong, we’ll explain how we think you should put things right. This usually means putting the customer in the position they’d be in if they hadn’t taken out the policy. We’ll also tell you to add interest – typically at 8% – to any compensation if your customer has been out of pocket.
If you’re paying compensation, you need to clearly explain how you’ve calculated it. This will depend on the kind of policy your customer took out. For example, was it attached to a loan or credit card, or was it a stand-alone regular-premium policy?
If the consumer or CMC disagrees with the amount you’ve calculated, we’d expect you to deal with their queries in the first instance rather than referring them to us. As you’re responsible for the calculations, you’re in a better position to answer any questions.
Trouble and upset
If we think your customer has suffered unnecessary trouble, upset or distress or inconvenience, we might tell you to pay additional compensation.
Our decision will depend on the circumstances of the individual case. But we’re likely to make an award if there’s evidence that:
- the customer experienced unreasonable pressure to take out the policy, which caused material distress
- there’s evidence that the customer is facing significant financial problems as a result of being mis-sold the policy
Businesses and consumer advisers can contact our technical desk on 020 7964 1400 for general information on how the ombudsman might look at a particular complaint, or for guidance on our rules and how we work.
Read some of the key decisions we’ve issued in this area.
Search our database of published ombudsman’s decisions.