Imposing time limits on PPI complaints

In a move that should have surprised no one, the British Bankers’ Association (BBA) has asked the Financial Services Authority (FSA) to consider a time limit on Payment Protection Insurance (PPI) complaints.

This request came with a condition, that the banking sector would fund an advertising campaign to ensure consumers are aware of the PPI issue and how to complain.

Imposing a time limit on PPI complaints is potentially a good idea.

All of us need a banking sector that is financially robust, profitable and in a position to help the economy grow sustainably.

However, funding a sufficiently widespread advertising campaign to ensure consumer awareness is probably not the right approach.

Instead, we believe that banks should write to all customers who were sold PPI and invite them complain.

As well as ensuring all those who were potentially mis-sold PPI were aware of their right to complain, this approach would also help to cut parasitic claims management firms out of the loop.

It is rarely necessary to use a claims management firm when making a complaint to a regulated financial services firm; the entire system is designed to make it easy for the consumer to manage their own complaint.

What cutting these firms out of the compensation loop would achieve (as well as a decrease in spam text messages and automated phone calls) would be to get more of the compensation into the pockets of banking customers.

With such an approach, the banks could hopefully draw a line under the PPI shambles, start lending again and implement the sorts of deep-rooted cultural changes required to make sure such mis-selling does not occur again.

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