FOS six-month time limit upheld by High Court

10 December 2012

The High Court confirmed on Wednesday that a decision of the FOS that a complaint against a bank was outside the six-month time limit for bringing a complaint could not be impugned as irrational or unlawful.

Questions of FOS jurisdiction are beyond the individual Ombudsman’s discretion and therefore more readily susceptible to judicial review. Conversely, this also serves as a reminder of the difficulty of seeking judicial review of an Ombudsman decision where it involves any discretion as to the facts of a case.

In the case of R (on the application of Bankole) v FOS, the complainant alleged that the respondent bank caused him loss by refusing to remortgage his commercial premises on the basis of a surveyor’s report which he felt wrongly undervalued the property. He challenged the decision of an Ombudsman that the FOS did not have jurisdiction because the complaint was submitted outside the six-month statutory time limit for referring a complaint under DISP 2.8.2(1). For good measure, the complainant also sought judicial review of the refusal of a Chief Ombudsman to overturn or re-open the previous decision after representations were made by his MP.

The High Court confirmed that the Chief Ombudsman had no power to act as an ‘appeal court’ from the formal decision of the Ombudsman on the time bar question. The Judge found that it was clear from the statutory scheme under FSMA that the Ombudsman’s decision could only be challenged on the usual judicial review grounds. The Ombudsman’s conclusion that a final response letter had been issued could not be impugned as irrational or unlawful. On the only relevant issue of fact – whether or not the final response had been received – the Ombudsman conclusion that, as a matter of fact the letter had been received, was one which was lawfully open to him and was supported by the evidence. As long as the final response complies with the rules (particularly by including a statement of the complainant’s right to refer the matter to the FOS within six months), the complaint will be time barred after six months.

I can well understand why the Ombudsman and Judge sought to satisfy themselves that this complainant had actually received the final response but, strictly, the rule actually applies “six months after the date on which the respondent sent the complainant its final response”.

This six-month time bar has no equivalent in general law (although it is akin to the CPR requirement to serve a Claim Form within 4 months of issue). The decision of the Court to recognise the hard and fast rules under DISP – and cases we have seen where the rule has been applied by the FOS even in respect of complaints about suspended funds where no loss has even crystallised – should give some comfort to firms who complain about the injustice of having no long stop time bar.

Also of interest – where a complainant’s case is rejected by the FOS on its merits he can simply ignore the decision and his legal rights are unaffected. An Ombudsman’s decision only binds the respondent firm. This ought to make it impossible for complainants to seek judicial review by the High Court of an Ombudsman’s decision on merits but I presume this case was allowed to proceed on the basis that a decision by the FOS on its jurisdiction is effectively binding on the complainant, especially if he is time barred already from bringing a claim before the Court by operation of the Limitation Act (which is reflected but not entirely replicated in the DISP rules).

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