In November 2015, the FCA issued a consultation paper on proposed new rules and guidance for PPI complaints.

This consultation process is now closed to responses and we are awaiting the FCA’s response to their consultation.

This Consultation Paper set out, and asked for views on proposals for:

  • a new rule that would set a deadline by which consumers would need to make their PPI complaints or else lose their right to have them assessed by firms or by the Financial Ombudsman Service
  • an FCA-led communications campaign designed to inform consumers of the deadline
  • a new fee rule on funding this consumer communications campaign
  • new rules and guidance on the handling of PPI complaints in light of the Supreme Court’s decision in Plevin v Paragon Personal Finance Ltd
  • the proposed deadline also to apply to PPI complaints falling within the scope of the proposed rules and guidance on Plevin

The original paper and associated documents can be found here.

The ACC Response

Each member firm prepared individual responses to this consultation paper. On behalf of the ACC, We Fight Any Claim instructed Stephen Knafler QC to provide an opinion on this consultation as its response to the FCA.

This opinion was subsequently reported in The Times, on the 18th February 2016, which reported that:

“A claims management company has warned the Financial Conduct Authority that unless it tears up its consultation over a two-year cut-off for all PPI claims, which is due to conclude on Friday next week, it will seek a judicial review on the basis of a legal opinion that the deadline might be unlawful.

The threat comes as banks prepare to set aside billions of pounds in extra provisions for PPI claims alongside their annual results next week.

The UK’s biggest ever mis-selling scandal has already cost the industry £30 billion.

The threat of judicial review has come from We Fight Any Claim, which also objects to the FCA’s proposal to allow companies that sold PPI to keep half of their undisclosed commission on sales.

The Wales-based company said that it would act on the basis of legal opinion it commissioned from Stephen Knafler, QC, a senior barrister who said that the FCA’s actions were “probably unlawful”. He has claimed that the FCA’s plan for a campaign to raise public awareness of the looming PPI deadline was inadequate and a failure of its statutory objective of consumer protection.

Mr Knafler said there was a lack of detail about the campaign, including whether it would spell out the fact that many PPI policies had exclusions from payment for illnesses such as stress or back pain, some of the most common reasons people are absent from work and therefore might want to claim for.

He added that the campaign might not reach the elderly and other vulnerable groups, especially as the FCA had already admitted that “a majority of the PPI policies sold have not been complained about” despite the issue being in the news for more than a decade. The FCA’s plan to deal with unclosed commissions, which is the result of a Supreme Court judgment, was also flawed, according to Mr Knafler.

The FCA has proposed allowing companies to retain half of the fee that they originally charged. That was far higher than the cost of the sale plus a profit, which the authority had put at 16 per cent, Mr Knafler claimed.

The banking industry has lobbied for a cutoff for PPI claims and accused the claims management industry of making thousands of bogus complaints on behalf of individuals. Last week the Ministry of Justice proposed capping fees that claims companies can charge. Claims firms have taken about £3.5 billion in charges since 2011.

Andrew Tyrie, chairman of the Treasury select committee, who has been sent a copy of Mr Knafler’s opinion, said: “The FCA should ensure that the programme of work for PPI complaints does not bring detriment, or unreasonable delay, for the consumer.”

An FCA spokesman said: “The consultation process is designed to encourage all stakeholders to share their views so that they can be properly considered and the right policy put in place as a result.”

If you would like to read Stephen Knafler QC's full opinion, please click here.