Britain sets 2018 deadline for claims in country's costliest bank scandal

Thu Nov 26, 2015 7:40am EST
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By Huw Jones

LONDON (Reuters) - Britons who were missold loan insurance, in what turned out to be the country's costliest consumer finance scandal, will have until 2018 to claim compensation under regulatory plans intended to draw a line under the issue.

Britain's banks, which have already set aside more than 28 billion pounds ($42 billion) to cover payment protection insurance (PPI) complaints are also keen to close the issue. Lloyds Banking Group (LLOY.L: Quote) alone is accounting for about half the total compensation payments.

The banking watchdog, in a consultation paper published on Thursday, set out new rules on PPI complaints and said a campaign to inform consumers about the time limit would be funded by banks who missold the insurance.

The Financial Conduct Authority (FCA) proposed setting a deadline for new complaints on PPI sales of two years after the start date of the new rules, meaning some time in 2018.

"Consumers who are unhappy about PPI should continue to complain to the firms concerned and to the Financial Ombudsman Service if they are not satisfied with the response," the FCA said in a statement.

Making a complaint is free and most people should not need to use a claims management company to help them, it added.

Thursday's announcement is largely in line with a pre-announcement by the FCA in October on PPI, which was intended to give borrowers cover against possible default on a loan, such as a mortgage, but was often missold to people would could not make a claim.

Consumer campaign website said the proposed new rules and time limit were a "done deal", and was disappointed the deadline for claims was not longer to give consumers more time.   Continued...

A man waits outside the corporate headquarters of Lloyds Banking Group in the City of London August 1, 2013. REUTERS/Andrew Winning