UPDATE 1-FCA to make decision on mis-selling redress by summer's end

* FCA has been collecting evidence since January

* Considering impact of November Supreme Court ruling (Adds detail)

LONDON, May 27 (Reuters) - Britain's financial regulator'sview on how complaints about mis-sold loan insurance are beinghandled and what action it plans to take will be announced bythe end of the summer, it said on Wednesday.

The Financial Conduct Authority (FCA) said in January thatit would collect evidence on whether consumers mis-sold paymentprotection insurance (PPI) were being compensated properly anduse it to assess whether the current approach was working.

It said it would consider imposing a deadline on customersclaiming compensation, potentially drawing a line under thecountry's costliest consumer finance scandal.

The FCA said on Wednesday that it is considering whetheradditional rules or guidance about PPI compensation are requiredafter the Supreme Court ruled in November that a failure bylender Paragon Personal Finance to disclose to a client a largecommission payment on the sale of a PPI policy has made therelationship between lender and borrower unfair.

Banks have so far set aside more than 26 billion pounds ($40 billion) to compensate customers mis-sold PPI policies.

The insurance policies were meant to protect borrowers inthe event of sickness or unemployment but were often sold tothose who would have been ineligible to claim.($1 = 0.6479 pounds) (Reporting by Matt Scuffham; Editing by David Goodman)