Banks and lenders are expected to face further costs for the mis-selling of PPI after the Financial Conduct Authority revealed plans to extend the deadline for compensation until 2019.
The FCA is hoping to impose a deadline for PPI compensation – a year later than originally planned – because it is beginning another consultation to investigate how the banks handled complaints.
The FCA has also made it clear that over £40m will be invested by banks into an advertising campaign to make customers aware if they have been mis-sold and could make a claim.
The delay means that the banks will have just under a year more than they had originally anticipated to cover the costs of further PPI claims. The PPI scandal has been the costliest in UK financial history, with the banks and lenders shelling out nearly £30bn between them since 2011.
The watchdog is calling for views on whether arrangements where banks kept part of the PPI premium that went unspent should be included in customer redress.
It is asking whether rebates paid to customers when they cancelled should be reflected in the compensation, reducing the amount of redress.
The FCA also wants to confirm its position on how banks redress where commission payments changed over the course of the policy.