In view of the FCA s new rules for processing PPI complaints effective from 29 August 2017 (the Rules ), we thought it would be beneficial to you, to us, and principally to our mutual customers to set our interpretation of some of the key Rules (see the attached Appendix) and how we will apply them in relation to new complaints made to American Express. But first, and more particularly, we would like to explain how American Express position in relation to the Rules may be different to many of the other firms that you deal with. We trust that this will result in customer complaints being appropriately submitted to us and processed, in accordance with the expectations of the FCA, the FOS and the MOJ/CMR. Commission levels of <50% American Express has evidenced to the FCA and the FOS that its commission levels from August 2001 onwards were under 50%. This means that under the Rules relating to whether the non-disclosure of commission gave rise to an unfair relationship, we will presume that there was no unfair relationship at all with many of the PPI customers we ever sold to. The effect of this to you is that if your clients purchased a PPI policy from American Express from August 2001 onwards, they will only be able to evidence an unfair relationship in very limited circumstances. Complaints already upheld for mis-selling We would also like to remind you that, under the Rules, if a customer has already had a complaint upheld and paid for mis-selling they are not entitled to bring a further complaint in relation to the nondisclosure of commission. We therefore expect you to take all reasonable steps to ensure that you do not submit further complaints on behalf of customers who have already received redress for misselling. We trust that you will give due consideration to this letter when submitting further enquiries or complaints to American Express on behalf of your clients. If we can provide any assistance or further clarification, please let us know. American Express Appendix Our current and historic commission levels - 1 August 2001 onwards American Express has demonstrated to the FCA and the FOS that it had total commission levels of less than 50% in respect of all policies sold and/or in force on or after 1 August 2001. American Express currently has commission levels of 40% in respect of existing policies. Under the Rules (DISP App 3.3A.4), we presume that our non-disclosure of commission to complainants who purchased PPI from us on or after 1 August 2001 did not give rise to an unfair relationship under section 140A of the Consumer Credit Act. Accordingly, we will reject complaints relating to the non-disclosure of commission from such customers, subject to any successful rebuttal of this presumption (see further below). o You should take note of this when submitting complaints to American Express on behalf of your clients. For example, you should make all reasonable enquiries of your clients to establish whether they purchased on or after 1 August 2001 and, subject to establishing and evidencing any factors that may give rise to a rebuttal of our presumption (see
further below), exclude them from complaints or enquiries submitted to us. You have an obligation under the CMR Conduct Rules to act responsibly and to take all reasonable steps to investigate the merits of a complaint and must therefore have processes in place to ensure that the complaint is eligible before presenting it to us. We reserve the right to report conduct we consider to be in breach of this obligation to your regulator. Such conduct would include, in particular, submitting significant numbers of complaints relating to the non-disclosure of commission in respect of customers who purchased on or after 1 August 2001 without providing any evidence to rebut our presumption that the relationship was not unfair. o You should also take note of this when considering escalating these rejected complaints to the FOS. The FOS has indicated that it does not expect you to refer complaints to it that have no realistic prospect of being upheld. - Pre-1 August 2001 American Express has disclosed to the FCA and the FOS that it may have had total commission levels of approximately 71% in respect of all policies sold and premiums paid prior to 1 August 2001. Under the Rules (DISP App 3.3A.4), we will presume that our non-disclosure of commission to complainants who purchased PPI from us prior to 1 August 2001 gave rise to an unfair relationship under section 140A of the Consumer Credit Act. Accordingly, we will uphold complaints relating to the non-disclosure of commission from such customers. Please note that, where a policy was purchased prior to 1 August 2001, but remained in force after that date, then as of that date, it would have been transferred onto new terms and commission levels of less than 50%. o You may wish to take note of this when submitting complaints to American Express on behalf of your clients. For example, you may wish to indicate that you have conducted all reasonable enquiries of your client and have cause to believe that they purchased PPI from American Express prior to 1 August 2001, which will assist us in dealing with the complaint quickly. Rebutting our presumption that our commission levels were fair - Under the Rules, the presumption that the non-disclosure of commission did not give rise to an unfair relationship can be rebutted by customers an example of a factor that may contribute to its rebuttal includes that the customer was in particularly difficult financial circumstances at the time that the customer was sold the PPI (DISP App 3.3A.6). The FCA has indicated that it does not expect many complainants will have been in such circumstances at the time PPI was sold to them and has not provided any more detailed guidance on what factors should be taken into consideration by firms when considering rebuttals to this presumption. Accordingly, we have provided some guidance below as to circumstances existing at the time of the sale (around two months prior and six months after) that we consider could rebut this presumption: - Evidence of falling significantly behind in mortgage payments or other essential bills, or our credit card repayments (e.g. 3 or 4+ consecutive arrears) - Very high levels of debt on other credit cards or loans - Issuance of a bankruptcy petition, making of a bankruptcy order, or entry into a voluntary arrangements with creditors - Significant actions taken to reduce substantial debts (e.g. disposal of high value assets/securities) While we will give due consideration to other evidence put forward by complainants, we are putting you on notice that we, as a responsible credit provider, do not expect many American Express PPI customers to be able to demonstrate that they were in particularly difficult circumstances at the time that they applied for their American Express credit card and purchased PPI from us.
o You should take note of this when submitting complaints to American Express on behalf of your clients, specifically those who purchased PPI from us on or after 1 August 2001. You have an obligation under the CMR Conduct Rules to act responsibly and to substantiate the basis of the complaint before presenting it to us. We reserve the right to report conduct we consider to be in breach of this obligation to your regulator. Such conduct would include, in particular, submitting significant numbers of complaints relating to the non-disclosure of commission in respect of customers who purchased on or after 1 August 2001 without providing any evidence to rebut our presumption that the relationship was not unfair. o You should also take note of this when considering escalating these rejected complaints to the FOS. The FOS has indicated that it does not expect you to refer complaints to it that have no realistic prospect of being upheld, which may include complaints from customers who purchased PPI from us on or after 1 August 2001 and who have not made any attempt to rebut our presumption that the relationship was not unfair. How much redress will your clients be entitled to in relation to our non-disclosure of commission? - Purchased from 1 August 2001 onwards because American Express commission levels did not give rise to an unfair relationship during this period (subject to any rebuttal of this presumption), your client s complaint will not be upheld and they will not be entitled to receive any redress under the Rules. o You should take note of this when submitting complaints to American Express on behalf of your clients. For example, unless you can obtain evidence from your client that they were in particularly difficult financial circumstances at the time they purchased PPI from us, complaints relating to these customers will not result in any redress being paid. - Purchased pre-1 August 2001 because American Express may have earned up to 71% in commission during this period, customers who complain may be entitled to redress calculated as 21% of the premiums they paid between the start of their PPI policy and 31 July 2001, plus historic and simple interest where applicable. However, they will not receive redress relating to premiums paid after that date (as our commission levels were below 50% from that date). Please note that, if the customer has entered into bankruptcy or a voluntary arrangement with creditors, any redress may need to be paid to the trustee in bankruptcy, or to the customer s arrangement supervisor the customer may not be entitled to be paid redress directly. o You may wish to take note of this when submitting complaints to American Express on behalf of your clients. For example, customers who purchased their PPI policy from American Express long before 1 August 2001 will potentially be entitled to receive more redress that those who purchased close to that date. The amount they will receive in redress will also clearly depend on the total premiums they paid prior to 1 August 2001. Complaints previously upheld for mis-selling - Customers who had their complaints for mis-selling upheld are not entitled to additional redress in relation to the non-disclosure of commission under the Rules (DISP 3.1.1A). o You should not submit complaints that have already been upheld for mis-selling to be considered in respect of the non-disclosure of commission by American Express. You have an obligation under the CMR Conduct Rules to act responsibly and to take all reasonable steps to investigate the existence of a complaint and must therefore have processes in place to ensure that the complaint is eligible before submitting it to us. We reserve the right to report conduct we consider to be in breach of this obligation to your regulator.
Complaints previously rejected for mis-selling - Customers who have already submitted a mis-selling complaint that has not been upheld, either by American Express or by the FOS, are not entitled under the Rules to have their mis-selling complaint re-reviewed (DISP 3.1.1A). Such customers do, however, have new rights under the Rules to submit a complaint in respect of the non-disclosure of commission by American Express. o You should not re-submit complaints that have already been rejected for mis-selling to be re-considered for mis-selling. You have an obligation under the CMR Conduct Rules to act responsibly and to take all reasonable steps to investigate the merits of a complaint and must therefore have processes in place to ensure that the complaint is eligible before presenting it to us. We reserve the right to report conduct we consider to be in breach of this obligation to your regulator. Such conduct would include, in particular, resubmitting complaints in respect of customers who never had any PPI relationship with American Express. o You are entitled to submit complaints specifically in relation to the non-disclosure of commission by American Express on behalf of customers previously rejected for misselling, subject to having authority to do so (see further below). You have an obligation under the CMR Conduct Rules to act responsibly and to substantiate the basis of the complaint when presenting it to us. For example, you may consider obtaining your clients specific confirmation that they wish to complain in relation to the non-disclosure of commission and specify this in the complaint. o We are writing direct to all customers rejected for mis-selling who have not previously raised this in their complaint to inform them of their new rights to complain to American Express under the Rules (see further below). Letters of authority ( LOAs ) for new complaints - In accordance with guidance from the FCA, FOS, MOJ and the BBA, we require that all claims management companies can demonstrate that they have the appropriate authority to act on behalf of their clients when submitting complaints on their behalf. o We require a fresh, duly completed and signed LOA to be provided in each case where you have not previously raised a complaint in relation to the non-disclosure of commission and/or the previous complaint under the LOA was rejected more than six months ago and has not already been referred to the FOS. o When presenting a new complaint on behalf of a previous complainant on the basis of the non-disclosure of commission, you will be expected to use and include relevant information you and/or your client has already been provided with to assist us in investigating the complaint. Our proactive mailing campaign to previously rejected complainants (DISP App 3.11.2) - We will, in segments and by no later than 29 November 2017, write direct to all customers previously rejected for mis-selling to inform them of their new right under the Rules to complain in relation to our non-disclosure of commission (unless we have already indicated in writing to them that we will consider such complaint). o We will not address these letters to you, even if you have a valid LOA, and you will not be copied in to this correspondence. We will not notify you of any complaints we receive in response. Should you believe you are entitled to payment in respect of such complaints, this is a matter for you and your client to resolve. Customers who are out of scope of the Rules relating to the non-disclosure of commission
- The definition of credit agreement under the Rules (DISP App 3 Glossary) excludes agreements made before 6 April 2007 and completed before 6 April 2008. This means that customers who entered into their credit card agreement with American Express before 6 April 2007 and whose credit agreement ended (i.e. the account was closed with no further amounts payable or capable of being payable) before 6 April 2008 are not entitled to bring a complaint in relation to whether the non-disclosure of commission gave rise to an unfair relationship under the Consumer Credit Act. o You should take note of this when submitting complaints on behalf of your clients. For example, you should take all reasonable steps to investigate whether (a) your clients entered into their credit agreement on or after 6 April 2007, or (b) your clients credit agreement ended on or after 6 April 2008 if either is the case, they are entitled to bring a complaint in relation to the non-disclosure of commission. If you submit a complaint on behalf of a customer who has also submitted a complaint direct to us, or if you and other claims management companies complain on behalf of the same customer - We will deal direct with customers if they bring a complaint to us, regardless of whether you have already also submitted the same complaint on their behalf (that has not been resolved) or whether you do so at a later date. If one or more further claims management companies submit or have submitted complaints in relation to the same customer, we will deal direct with that customer until they tell us which company they wish to represent them. o While you may not always be aware that customers have complained to us direct, or that other claims management companies have also submitted complaints on their behalf, in order to ensure complaints are dealt with quickly and in the best interests of the customer you should communicate with you clients to ensure you have their clear authority to act on their behalf.