This section answers a number of frequently-asked questions (FAQs) about:
why does the 15-year "long-stop" rule not apply, to time-bar complaints to the ombudsman service?
As with the courts, a consumer generally needs to have complained within certain time limits if the business is to handle the matter formally under the official complaints procedure. These time limits are set out in the complaints-handling rules – in the "DISP" section of the regulator's handbook.
In civil actions in the courts, there is usually an overall "long-stop" requirement that the matter complained about should have happened within the last 15-years. This limitation does not apply to complaints to the ombudsman. There is no 15-year "long-stop" rule in the complaints-handling rules made under the Financial Services and Markets Act and the Consumer Credit Act.
This reflects the fact that financial products are "intangible" and can be of a very long-term nature. Problems – for example, with a mortgage product or a whole-of-life policy – may only emerge or become apparent many years after the contract was taken out.
On the other hand, an important time-limit that applies to consumers bringing complaints to the ombudsman service – but not to legal action in the courts – is the requirement under the complaints-handling rules for a consumer to complain to the ombudsman within six months of the final response letter from the business concerned.
In its policy statement published in January 2003 after public consultation (see paragraph 3.3 of feedback on CP158 [opens in PDF format]), the FSA set out why there is no 15-year limitation period in the complaints-handling rules:
We do not consider it is in the interests of consumers to rule out the possibility of complaints being dealt with outside the 15-year period that would apply to court cases. Nor do we consider this necessary to prevent hardship to firms.
Following a further review and public consultation – on whether to introduce a 15-year "long-stop" on bringing complaints against financial services businesses (see paragraph 4.94 of feedback on DP07/1 [opens in PDF format]) – the FSA said in November 2008:
Having thought carefully about this additional information, we have concluded that we should not introduce a long-stop because we have been unable to demonstrate that it would bring additional benefits to consumers and firms (for example from greater investment in the sector) given that the consumer detriment from time-barred complaints is equal to the resulting benefit for firms from compensation payments.
In November 2009 the FSA issued a statement saying again that it:
... had rejected the proposal to introduce a long-stop time limit of 15 years for customer complaints.
The FSA warned businesses in its statement that:
A long-stop clause [added by a business in its standard terms as a contractual time limit for complaints] may be inconsistent with the FSA's statutory objective of ensuring the appropriate level of consumer protection if such a clause excludes or restricts any liability that a firm has to a consumer bringing a claim using the financial ombudsman scheme or the courts.
In his review of the Financial Ombudsman Service, published in April 2008, Lord Hunt – a senior financial-services lawyer and former government minister – also concluded [see para 7.26 of Lord Hunt's report – opens in PDF format] that the introduction of a 15-year "long-stop" would be untenable in terms of treating customers fairly.