FCA clarifies how PPI complaints should be handled

FCA clarifies how PPI complaints should be handled

Firms should assess payment protection insurance (PPI) commission disclosures on an ongoing basis when handling complaints, the Financial Conduct Authority has said.

The regulator has issued new guidance on PPI which stated firms should not only assess commission disclosures at the point of sale.

It comes after a Supreme Court judgement ruled that a lender's failure to disclose at point of sale a large commission payable out of the PPI premium can make the lender's relationship with the consumer unfair under the Consumer Credit Act.

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In response to this the FCA introduced new rules but the regulator has said there is uncertainty about some complaints about regular premium PPI and whether firms should consider recurring non-disclosure of the existence of, or level of, commission and/or profit share when assessing these complaints.

The guidance says recurring non disclosure is a kind of ommission which can make a credit relationship unfair under the Consumer Credit Act so should be assessed when firms handle a complaint about regular premium PPI.

Jonathan Davidson, executive director of supervision for retail and authorisations at the FCA, said: "This consultation provides guidance on how to ensure fair and consistent outcomes for regular premium PPI complaints.

"It supports our aim of bringing the PPI issue to an orderly conclusion in a way that secures appropriate protection for consumers and enhances the integrity of the UK financial system."

The FCA stated it had become aware some firms were rejecting, or intended to reject, any complaint involving undisclosed commission for restricted credit PPI sold before 6 April 2007.

This was because the FCA's rules following the Supreme Court decision applied only to the non-disclosure of commission at the point of sale, not to later non-disclosures, and because any non-disclosure at point of sale that took place before 6 April 2007 was not covered by the regulator's complaints rules at all.