Our response to the regulator’s PPI time-bar consultation… it’s a gross injustice!

The regulator the FCA has proposed time limiting PPI claims. Supposedly this is meant to be a boon to consumers. Yet in reality this is just a sop to banks to help them close off the huge liability that their fraudulent selling of PPI has been.

The FCA published a consultation document; today is the last day for responses and MoneySavingExpert will be sending in our detailed paper on it. I thought it was important to be transparent and make it public.

MSE Wendy and MSE Will have done a great job on the response – often translating many of my rambled thoughts into a thorough policy document. The paper itself is long, so here is my executive summary from the start of it, if you just want a quick flavour.

A PPI complaints time-bar would be a gross injustice, stripping consumers of the right to complain for being mis-sold to in Britain’s largest ever reclaim process. It is staggering that there have been no prosecutions for fraud after this £22 billion racket – and now even the regulator wants to brush it under the carpet. This is an anti-consumer move.

“Yet banks haven’t just mis-sold PPI, they’ve mishandled PPI complaints. There is still an almost 70% uphold rate for those who are unsatisfied by the banks’ handling of their case and who go on to the Ombudsman. Banks clearly use an initial rejection as a tactic to avoid paying out, knowing many consumers won’t take it all the way. There should be no time-bar for any bank with an uphold rate above 20%.

“Worse still. As part of this consultation a brand new and complex regulation over the Plevin case is due to come in, which could mean potentially hundreds of thousands if not millions more people are due to get their money back, and yet against all natural justice the FCA plans to put a time-bar on this too, even before it’s started. This is plainly ridiculous and even if a time-bar is imposed Plevin cases should not be covered by it.

“However, as it is well known this consultation is a farce in terms of the time-bar – it is going to happen anyway – we also need to address the way to limit the damage of this move.

“It is absolutely imperative that for a time-bar to happen it is communicated to everyone who may be owed their money back.

“A mass media campaign is crucial – but that is only one element of the communication plan. Many people are unaware they have PPI, as one core way it was mis-sold was adding it when people refused. Therefore for a time-bar to work, every single person who has had PPI must be written to by their bank to inform them of the details. Without their working in conjunction, the only thing this time-bar will do is be a liability limiter for the banks and building societies which mis-sold this product, at the cost of the people who were defrauded.

If you’d like to read the full response, just click the image below for the PDF

PS: I know some people will be glad to see the end of PPI to stop the hideous spam calls and texts from the PPI claims industry. We address this in our consultation response – that is a separate issue. Those firms will simply move on to another subject. If we want to stop PPI spam calls, we should tackle that as a discrete issue, not kibosh people’s ability to get back money that was wrongly taken from them.

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