The decision follows a request from the British Bankers’ Association (BBA).

The BBA has said it will conduct a widespread advertising campaign by the banking sector to ensure consumers are aware of the PPI issue and how to complain, and the FSA should consider the time limit in this context. 

In a statement the FSA said: “Our key priority is to ensure consumers are protected, so the FSA board would need to be convinced that any proposals would be in the interests of consumers. 

“We have had initial discussions and are prepared to consider the merits of this and other options. A key consideration will be the potential to get compensation to more consumers, more quickly.

“We will continue to hold discussions with the BBA as well as actively seeking the opinions of consumer groups and other stakeholders.

“However, no changes to existing FSA, or future Financial Conduct Authority (FCA), rules would take place without a full public consultation.”