Talks over time limit on PPI claims

The Financial Services Authority (FSA) said it has been approached by the British Bankers’ Association (BBA) to discuss the potential for a time limit in return for the banking industry funding widespread advertising to raise awareness and ensure people know how to complain.

Reports have suggested that the deadline could be as early as May 2014 but a spokeswoman for the FSA said that no time limits had been pencilled in at this stage and discussions were still in their very early stages.

The watchdog said it would need to be convinced that the proposals are in consumers’ best interests before anything like this were to happen.

There will be no changes to its rules without a full public consultation, the FSA said.

About £13bn has been put aside by financial institutions to compensate customers for mis-sold PPI policies and the scale of the scandal continues to spiral beyond expectations.

The FSA’s statement said: “Our key priority is to ensure consumers are protected, so the FSA board would need to be convinced that any proposals would be in the interests of consumers.

“We have had initial discussions and are prepared to consider the merits of this and other options. A key consideration will be the potential to get compensation to more consumers, more quickly.”

The statement said the FSA will continue to hold discussions with the BBA as well as talking to consumer groups. It said: “No changes to existing FSA, or future Financial Conduct Authority (FCA), rules would take place without a full public consultation.”

Condemnation came from consumer groups as speculation mounted over the proposals earlier this week.

Martin Lewis, creator of MoneySavingExpert.com, said previously that it would be “immoral” to put a deadline in place as early as next summer.

He said: “It’s likely that as few as one in five eligible customers has actually reclaimed.

“This money was wrongly taken from people, due to systemic selling and, on some occasions, downright deceit. That went on for over a decade. People should have at least as long as that to get their money back.”

Standard statute of limitations rules state that consumers can claim compensation up to six years after the date they were sold a product. But they are also eligible to claim compensation for up to three years after they first became aware that they were mis-sold a policy.

Estimates have put the number of PPI policies that were sold over the last decade at anywhere between 25 and 40 million, although only a proportion of these policies will have been mis-sold and not every customer will make a claim.

The Financial Ombudsman Service (FOS) said last week that it plans to take on 1,000 more case workers this year to cope with the flood of PPI complaints it continues to receive, which have surged way past previous estimates.

The ombudsman service expects to have to clear up a record 245,000 PPI cases during the next financial year and it has criticised financial companies for dragging their heels over customers’ complaints.

A BBA spokesman said the body wants to ensure that consumers who have been mis-sold a policy receive their compensation as quickly and easily as possible.

He said: “The BBA and its members are committed to improving trust and confidence in banking, and we want to ensure that where customers have been mis-sold that they should receive all the compensation that they are entitled to.”