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10 January 2017

Getting it right – the PPI deadline and vulnerable consumers

A closer look at the implications of the proposals to impose a final deadline for payment protection insurance (PPI) complaints on vulnerable customers.

One of the Financial Conduct Authority’s (FCA) key objectives is to secure an appropriate degree of protection for consumers. According to the Financial Services Markets Act, 2000, the FCA and the financial firms it regulates must have regard for ‘the differing degrees of experience and expertise that consumers may have’. A key risk to this is a failure to address vulnerability, which can be characterised by a range of emotional and practical consequences that impact an individual’s ability to deal with their finances and interactions with firms.

The FCA’s research has shown the impact of vulnerability on everyday life should not be underestimated and it is working to ensure that financial firms take appropriate steps to ensure the needs of vulnerable consumers are given due consideration.

In August, the FCA confirmed that its package of proposals will be taken forward. Before making a final decision, the FCA is consulting changes in light of the Plevin case. However, the two main proposals are expected to remain unchanged:

  • The imposition of a deadline for making new PPI complaints (estimated June 2019)
  • The launch of a consumer communications campaign to raise awareness of the PPI issue and the deadline.

According to the FCA, a vulnerable customer is someone who ‘due to their personal circumstances is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care’. This may include individuals with physical or mental health issues, those who have been recently bereaved, carers, younger and older people or others where there is a language barrier. Detriment can take many forms including emotional aspects such as stress and anxiety, financial detriment arising from sub-optimal or reduced choices, a debt spiral or inappropriate purchases.

In light of the emphasis the FCA is putting on the issue of vulnerable consumers, financial firms will be expected to work accordingly with all of their clients as they bring the PPI claim issue to a conclusion. Financial services firms will need to consider, for example, the challenges faced, particularly by older people, or those with a visual impairment, in accessing PPI information, most of which is web-based, due to lower levels of internet usage. Or the issues for those with visual impairment who also have lower internet usage and, additionally, may need to involve a third party to act on their behalf.

Download the full article: ‘Getting it right – the PPI deadline and vulnerable consumers’, first published by Capita Asset Services.

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