The High Court has handed down a decision confirming that the FOS overstepped its jurisdiction under the DISP rules regarding complaint time limits. It is the first known case in which the FCA – as statutory authority behind the FOS – has intervened in a complaint against the FOS in order to challenge its position.
FOS’ interpretation
The FOS had decided that it had the jurisdiction to consider four complaints from consumers about ‘unfair ‘consumer credit agreements against Barclays, NatWest, Vanquis and Santander. The complaints related to historic lending that occurred outside of standard DISP time limits. The FOS had nevertheless treated the complaints as within its jurisdiction on the basis that the alleged unfairness could be ‘continuing’ and time did not run until the complainants became / could reasonably become aware of that alleged unfairness.
The banks’ challenge and FCA’s intervention
The banks challenged the FOS via judicial review. They argued that the complaints were clearly outside of the DISP time limits, and there was no basis on which to treat any alleged unfairness as continuing because: the conduct occurred at the time of the agreements; there was no ongoing act or omission that extended the time limit; and simply continuing credit payments does not convert a historic complaint into a continuing one.
Crucially, the banks thought that FOS was improperly using the ‘unfair relationship’ CCA framework to circumvent the DISP limitation regime. The FOS itself acknowledged it had adopted a new legal interpretation.
The case marks a novel development in that it is the first known instance of the FCA intervening in a case against the FOS, in order to challenge the position taken by the FOS. The regulator was “greatly concerned” about the attempt to asset an expanded jurisdiction, which it thought was contrary to the time limit the FCA had created as regulator under its Parliament-derived rule-making powers.
Decision
The court held that FOS was not entitled to treat an ‘unfair relationship’ as a continuing even for the purposes of DISP 2.8.2 R, and that it had wrongly treated alleged unfairness as extending or re-starting time such that the whole credit relationship could be considered.
The court rejected an argument – brought by Barclays only – that FOS’ new formulation exposes lenders to undefined and unlimited financial liability, in contradiction with protection of property rights under ECHR.