Financial Guidance and Claims Act 2018

31 PPI claims: interim restriction on charges imposed by authorised persons after transfer of regulation to FCA

(1) The rule specified in subsection (2) is to be treated for the purposes of the Financial Services and Markets Act 2000 as if—

(a) the rule were a general rule made by the FCA under section 137A of that Act, and

(b) this section were contained in that Act;

and accordingly functions conferred on the FCA by that Act which apply in relation to general rules made under section 137A apply to that rule as they apply to other general rules made under that section.

(2) The rule is that an authorised person—

(a) must not charge a claimant, for a service which is a regulated claims management activity provided in connection with the claimant’s PPI claim, an amount which exceeds the fee cap for the claim, and

(b) must not enter into an agreement that provides for the payment by a claimant, for a service which is a regulated claims management activity provided in connection with the claimant’s PPI claim, of charges which would breach, or are capable of breaching, the prohibition in paragraph (a).

(3) A breach of either of those prohibitions is not actionable as a breach of statutory duty (despite section 138D(2) of the Financial Services and Markets Act 2000); but—

(a) any payment in excess of the fee cap for a PPI claim is recoverable by the claimant, and

(b) any agreement entered into in breach of the prohibition in subsection (2)(b) is not enforceable to the extent it provides for a payment that breaches or is capable of breaching the prohibition in subsection (2)(a).

(4) In subsection (3) “payment” means a payment of charges for a service which is a regulated claims management activity provided in connection with the claim.

(5) The rule in subsection (2) applies as follows—

(a) the prohibition in paragraph (a) applies only to charges imposed under an agreement which is entered into during the second interim period, and

(b) the prohibition in paragraph (b) applies only to agreements entered into during that period.

(6) In subsection (5) “the second interim period” is the period—

(a) beginning with the day on which the first section 22(1B) specified activity provisions come into force for (or for purposes which include) the purposes of the general prohibition in section 19 of the Financial Services and Markets Act 2000, and

(b) ending with the day before the coming into force of the first relevant general rule made by the FCA (whether for all purposes or for any specific purpose).

(7) In subsection (6)(b) “relevant general rule” means a general rule that—

(a) is made under subsection (1) of section 137FD of the Financial Services and Markets Act 2000 (as inserted by this Act), and

(b) applies to, or to any description of, PPI claims (whether or not it also applies to anything else).

(8) In this section “authorised person” has the same meaning as in the Financial Services and Markets Act 2000 (see section 31(2) of that Act).