The Financial Conduct Authority (FCA) is consulting on a cut-off date for consumers to make payment protection insurance (PPI) complaints.
It said so far more than £20bn had been paid to more than 10 million consumers who were mis-sold PPI but the regulator wants to reduce uncertainty for firms around PPI liabilities.
Based on evidence collected from firms, consumers and other stakeholders, the FCA found a "high and growing proportion" of complaints were made using claims management companies.
It also noticed a rise in number of complaints related to older sales - pre-2005 and pre-2000 - where documentary evidence held by firms and consumers would leave "significant gaps" and evidence was "increasingly stale".
In addition, a "significant proportion" of complaints turned out not to have involved a PPI sale, while a number of customers who intended to complain admitted they "had not got around to doing so".
The deadline is two years from the date proposed rules come into force, in spring 2016. Therefore, consumers would have until spring 2018 to complain. The regulator said imposing a cut-off would prompt customers to complain ahead of the deadline.
The regulator believed its intervention would encourage customers to complain directly to firms rather than using and paying claims management companies.
The FCA also proposed rules and guidance around PPI complaints following a court decision earlier this year involving Susan Plevin and Paragon Personal Finance, which defined what constituted an "unfair relationship" between a consumer and a lender in terms of commission on PPI.
As a result the FCA has proposed a set level of redress, including interest, that should be paid when an unfair relationship is identified.
Colin Read, a partner in the insurance team at law firm Pinsent Masons, said: "A potential cut-off date in the spring of 2018 for PPI complaints offers real certainty for businesses which have set aside significant resource to manage the very large number of PPI claims which have hit the UK banking and insurance industry."
Tim Howarth, regulatory partner at KPMG, said a deadline was likely to put pressure on banks' claims handling departments and raise operational costs. But in the long term a deadline would allow "banks to move on, reduce provisions and plan for the future".
"It will be interesting to see whether the Plevin case becomes a precedent," he said. "If so, there could be a significant impact on the insurance industry, which is already under significant regulatory and market pressures."
FCA's proposals will be published in a consultation paper by the end of the year.
