PPI claim deadline proposed for June 2019
The Financial Conduct Authority (FCA) wants to set a June 2019 deadline for people to make claims over mis-sold payment protection insurance (PPI).
The financial regulator wants the rule for setting the deadline to come into force by the middle of 2017 alongside a public awareness campaign.
The FCA will listen to feedback on this and other proposed changes before its consultation closes on 11 October.
Banks have so far paid out £24bn in compensation.
The five biggest banks in the UK have set aside £32.6bn to deal with the total compensation bill.
Andrew Bailey, FCA chief executive, said: "Putting a deadline on PPI complaints will bring the issue to an orderly conclusion in a way that protects both consumers and market integrity.
"We have listened to all the feedback we have received and believe that the steps we are taking are the right ones.
"We will ensure that our communications campaign will engage with all those who could be affected, particularly vulnerable consumers."
What is PPI?
PPI was designed to cover loan repayments if the policyholder fell ill or lost their job.
About 45 million policies were sold over the course of 20 years from 1990.
But it became clear that it was mis-sold on an industrial scale to people who didn't want or need it - or would not be eligible to claim on it.
One consumer group said that the compensation scheme had not been sufficient.
Alex Neill, director of policy and campaigns at Which?, said: "The PPI scandal has been one disaster followed by another, it is the country's biggest financial scandal with a wholly inadequate redress scheme.
"If a PPI deadline is to be introduced, when millions of pounds are still being set aside for payouts, the FCA must work with banks to ensure that customers who might not know they were mis-sold PPI get back the money they are owed. The process for making a claim must be much more straightforward."
A spokesman for the British Bankers' Association (BBA), which represents the major banks, said: "The FCA's announcement provides further clarity for consumers on the proposed timeframe for making PPI complaints. An awareness campaign will also help to ensure everyone who deserves compensation gets it.
"The easiest way for anyone who suspects they are owed compensation, is to talk directly to their bank. We will continue to work constructively with the FCA as they consult on these proposals."
The FCA is also looking at changes to the proposed rules and guidance concerning the handling of PPI complaints after the Supreme Court judgment in November 2014 in the Plevin case, which extended the definition of mis-selling.
The ruling dealt with the case of a financial company's client not being made aware of a commission being paid when they were sold PPI.
The Court agreed that the company's failure to tell its client that it was receiving a large commission for the sale was unfair and the FCA has been working on how to apply this ruling to other cases.
It wants to take profit share into account when calculating how much consumers are due from previous rebates.