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Mis-sold consumers could face PPI claims deadline
The banks are said to be in talks with the regulator to draw a line under the payment protection insurance (PPI) mis-selling scandal.
by Michelle McGagh on Jan 16, 2013 at 14:15
A deadline for consumers to place payment protection insurance (PPI) claims could be enforced if the banks have their way.
The banks are in talks with the financial regulator and are believed to have put forward the idea of a deadline for PPI complaints, which threaten to cost them billions more than originally thought, according to The Times.
Banks are currently struggling to get through the back-log of PPI complaints and are concerned that the bill will exceed the £13 billion the banks have put aside to compensate customers. There are predictions that the costs could hit £25 billion or even £40 billion in a worst case scenario.
It is understood that the British Bankers’ Association (BBA) has suggested the Financial Services Authority (FSA) enforce a deadline of next summer for the submission of claims in return for the banks agreeing to fund an advertising campaign that would flag up the deadline.
Putting a deadline on claims would be controversial. By law consumers have six years to lodge a complaint about a financial product but are granted another three years to lodge a complaint if they become aware that they have been mis-sold to.
This means that someone mis-sold PPI in 2005 can still claim, even though the six-year rule expired in 2011.
It is thought the deadline and advertising campaign could act as a trigger for the three-year complaint period after which no more PPI complaints would be handled.
According to the FSA 16.1 million PPI policies have been sold since 2005, with a value of £17 billion. It estimates that the total value of PPI policies sold between 2001 and 2004 is £16.9 billion.
The BBA refused to confirm whether it had suggested the deadline idea to the FSA.
A BBA spokesman said: ‘We are working with our members on a number of aspects of PPI complaints. The on-going work focuses on three issues as a priority: addressing backlogs, making sure that customers can be confident that the offers they receive are right and highlighting that there is no need for them to engage a claims management firm.
‘Discussions with the FSA to clarify the parameters of their complaints handling guidance are on-going. We are unable to comment further at this stage.’
A spokesman for the FSA said it was monitoring the situation. ‘As you would expect for an issue of this scale and complexity, we have considered a number of options and continue to do so. PPI is an on-going and high-profile issue and we are monitoring it closely.’
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