The Financial Conduct Authority (FCA) is to look at introducing a deadline for claims and complaints against the policies, with a consultation paper expected to be published before the end of the year.
Advertisement
The FCA declined to comment.
The watchdog plans to reveal more details of the proposals before the end of the year.
The regulator had faced pressure from the industry to set a deadline for customers making claims for the insurance sold alongside loans as the bill has already reached more than £25bn in compensation and administration costs.
The FCA is now trying to tackle the repercussions of this case, which is known as Plevin v Paragon Personal Finance, after the supreme court ruled that if a PPI seller failed to disclose to a customer that it had received a large commission from the product provider, the sale was unfair under the 1974 Consumer Credit Act.
However, the deadline is expected to be a few time in early 2018, which means lenders and consumers have another two-and-a-half years to make claims and settle disputes.
The watchdog will consult on rules and guidance about how firms should handle PPI complaints in light of the so-called Plevin judgment by the Supreme Court.
The FCA has opened a period of consultation on its proposed rule changes which will close on 4 January, 2016.
If the ruling was applied to all PPI claims, banks may need to pay out billions of pounds more in compensation.
The FCA said a deadline would “bring the PPI issue to an orderly conclusion, reducing uncertainty for firms about long-term PPI liabilities and helping rebuild public trust in the retail financial sector”.
The regulator announced this evidence would be to assess whether the current approach is meeting the objectives of securing appropriate protection for consumers and enhancing the integrity of the UK’s financial system.
The FCA has also asked for views on other areas where further action could be taken including payment for arranging the sale of non-advised annuities.
Advertisement
Another of the proposed new rules removes the requirement for a firm to go through the question and answer process when a consumer has a pension pot of £10,000 or less and where there are no safeguarded benefits.
