Court considers time limits for PPI referrals

In the case of the Official Receiver and Shop Direct Finance Company Limited the Court of Appeal considered the time limit for referring complaints to FOS in respect of missold PPI, in particular where a person to whom the PPI was missold has become bankrupt. In principle, FOS may not consider a complaint referred to it more than 3 years from the date on which the complainant became aware or ought reasonably to have become aware of cause for complaint. The case considered whether the “complainant” here referred to the bankrupt person or to the Official Receiver acting as the bankrupt’s trustee in bankruptcy. 

The High Court held that the relevant awareness is that of the OR, but the OR contends it should be that of the bankrupt. The Court of Appeal allowed the appeal and set aside the decision of the High Court, but made no other declaration.

In May 2019, the OR had said it would bring a significant number of PPI claims against the Respondent, a consumer credit lender which is the financial services arm of the Very group. The OR would seek compensation for PPI policies held by bankrupts before their bankruptcy orders were made and, on the backstop deadline FCA had imposed for making PPI complaints, requested the Respondent to treat its correspondence as an expression of dissatisfaction in relation to any PPI policy identified as being held by the bankrupt on the date of bankruptcy.

In the High Court proceedings (which at that time also included a parallel claim), it was agreed that a trustee in bankruptcy is not the bankrupt’s agent or authorised to act for them. The High Court judge essentially said that the complaint whose awareness matters in the context of limitation is the person who “refers the relevant complaint with requisite capacity” – which would be the OR in the specific circumstances.

On appeal, the judge said the primary issue was not one of whether the OR’s right to bring a complaint falls within the definition of “property”, as was alleged, but that the primary issue was the interpretation of DISP. On this, Singh LJ said:

• there is force in the view that the overall thrust of DISP is that the subject matter of a complaint focuses on the underlying consumer – and although “complainant” is not defined, it is clear it is usually used to refer to the consumer even where it is clear someone else is making the complaint on their behalf;
• this is consistent with the nature of DISP, which is not like conventional legislation and is drafted as a relatively informal and simple scheme – so this means that “on behalf of ” can be interpreted in different ways;
• overall, the view that the relevant awareness is the OR’s is not sustainable, because it would have the “absurd” consequence of restarting the clock once the OR was in post, which cannot have been the idea of DISP – although the submission had not been that, but, rather, had argued that the period should have continued to run so the OR would have the benefit of whatever was left of the 3 years;
• that consultation and policy papers from regulators were not properly admissible in evidence as aids to interpretation.

Overall, the court felt the appeal should be allowed and the declaration granted by the High Court set aside, but made no other declaration. The judges, indeed, had slightly differing views over certain points, not least whether the answer to the fundamental question would be the same in all cases. The essence is that, while it was accepted that there would be times when one person would “take over” the complaint of another and cases where another person would make the complaint from the start, DISP is not clear as to who the “complainant” is in these situations. One judge made the point that the requirement that the “complainant” be eligible can only be determined (in this case) by considering whether the bankrupt was eligible, but equally many rules use the word “complainant” in such a way that it must refer to the person actually making the complaint. Nugee LJ succintly made the point that it would be a ridiculous outcome if, in a given situation, the bankrupt (or indeed deceased), had never become aware or ought reasonably to have become aware of cause for complaint, then any receiver (or executor) would never be time barred even if they immediately became aware of a cause for complaint, on the basis the original customer never had that awareness.

That said, no judge could easily assess what the declaration should be,