The UK’s financial regulator has flagged that it is to set a 2018 deadline for people to claim compensation for being mis‑sold repayment insurance, calling time on the country’s costliest consumer finance scandal.
The Financial Conduct Authority (FCA) said today that it aimed to consult by the end of this year before introducing the two-year deadline in spring 2016, meaning “consumers would have until at least spring 2018 to complain”.
Under the proposals, consumers would have to make their complaints about being mis-sold payment protection insurance (PPI) by the deadline or lose their right to have them assessed by the banks or by the financial ombudsman.
The FCA said in its statement: “We take the view that a deadline… would help bring finality and certainty in a way that advances the FCA’s operational objectives of securing an appropriate degree of protection for consumers and protecting and enhancing the integrity of the UK financial system.”
The regulator added that the consultation will also set out its plans for a FCA‑led communications campaign “designed to prompt consumers to complain in advance of that deadline”.
A deadline could help end some of the “inertia” being seen as some consumers were not bothering to make a claim, the FCA added.
Over the five years since the PPI scandal broke, Britain’s banks have set aside more than £28 billion to meet compensation claims, having so far paid out £20bn in total to more than ten million consumers.
Continual hefty exceptional charges often running to hundreds of millions of pounds a time have been taken by the major lenders for the mis‑selling, either plunging them into the red or severely denting their profitabilty each year.
Analysts at United States banking giant Citi said the new deadline may trigger a front‑loading of complaints, but also greatly reduced uncertainty for the banks.
“We believe this is a positive outcome, with Lloyds set to benefit most,” Citi analysts noted. Lloyds, the most UK‑centric of the Big Four banks, has earmarked £13bn for redress, the most of any lender.
Bank stocks rose 2-3 per cent early today after the FCA’s announcement.
But the shares gave up some of their gains in the afternoon as unwelcome weak jobs data from the US undermined general market sentiment.
New challenger bank Shawbrook today appointed Steve Pateman, head of UK banking at Santander, as its new chief executive.
He takes over in January 2016, replacing Richard Pyman who is stepping down following a period of leave due to illness.
Pateman lost out to ex-RBS executive Nathan Bostock last year in the appointment of a new chief executive at Santander UK.