The regulator said its decision to impose a deadline came in light of the Supreme Court judgment in Plevin v Paragon Personal Finance Ltd.
The consultation will also set out plans for a proposed FCA-led communications campaign designed to prompt consumers to complain in advance of that deadline.
This will include a proposed fee rule concerning the funding of the proposed communications campaign.
The FCA has also decided to consult on proposed rules and guidance concerning the handling of PPI complaints in light of the Supreme Court’s decision in Plevin. Such complaints would also be subject to the proposed deadline.
A statement from the FCA said: “We will set out the full detail of these proposed rules and guidance, the evidence we have considered, our reasons for proposing them, and our assessment of their costs and benefits, in the consultation paper we will publish before the end of the year.
“The following summary is intended to cover the key proposals that we will consult on but, as with any consultation process, what we have set out in this Statement may ultimately be subject to change.”
Over £20bn redress has been paid to over 10 million consumers so far however a high and growing proportion of complaints are made via claims management companies, with fee costs to the consumers who use them.
Research by the regulator also showed: a high and growing proportion of complaints relate to older sales (pre-2005 and even pre-2000), where the documentary evidence held by firms and consumers is likely to have significant gaps and recollections and oral evidence are becoming increasingly stale; a significant proportion of complaints made turn out not to have involved a PPI sale; a number of those consumers who intended to complain, also said that they had not yet got around to doing so.
The open-ended nature of the complaints-led approach appears to contribute to this consumer inertia – i.e. it does not incentivise consumers to check whether they had or have PPI or progress complaints in a timely fashion.
Around three quarters of the consumers surveyed have heard of PPI as a product (74%), most of whom (77%) say they are aware of problems or issues with it.
The proposed rules and guidance would only apply to PPI complaints where a claim could be made against a lender under s.140A.
That means that sums must have been payable (or capable of becoming payable) under the underlying credit agreement (which the PPI covered or covers) on or after 6 April 2008.
Where a complaint from a consumer against the firm that sold the PPI would be upheld under our current PPI complaint handling rules and full redress paid, our proposed rules and guidance would not require a firm (whether seller or lender) to consider the complaint further and so would not result in any further redress being paid to the complainant.
The FCA will include its assessment of the costs and benefits of the proposed rules and guidance in the consultation.
Which? executive director Richard Lloyd said:”It’s been clear for years that banks should be working much harder to resolve PPI claims fairly and a time limit must not reward those that have dragged their heels over paying out compensation.
“If a timebar is introduced, the FCA must make sure all banks carry out a complete review of their PPI handling. Efforts must be redoubled to ensure that anyone missold PPI is given fair, speedy compensation so that people get back what they’re rightly owed.”