A High Court judge in London has ruled against the Financial Ombudsman Service in a dispute over whether consumers can pursue complaints about older overdraft and credit card cases outside the usual time limits, reported the Financial Times.
The case was brought by Barclays, NatWest, Santander and subprime lender Vanquis.
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
They challenged the ombudsman’s position that some historic lending complaints could still be considered even after the standard deadline had passed.
The court found that the FOS had made a “fundamental error of law” in taking on such complaints beyond the established six-year period.
Under rules set by the Financial Conduct Authority, a consumer normally has six years to complain about a specific event.
If that period has passed, a complaint may still be made within three years of the point at which the consumer first became aware of the issue.
The FOS had argued that legal decisions, including a Supreme Court ruling in 2023, meant lenders carried an ongoing “corrective responsibility”.
On that basis, the ombudsman said a bank’s failure to put right an earlier problem for example, by declining to repay past interest charges could count as a new “omission” that could itself be challenged.
That reading would in practice have extended the period during which old lending cases could be examined.
Justice Dexter Dias rejected that approach. In the judgment, he said the FOS interpretation “seriously and unjustifiably” weakened the purpose of having a time limit and the need for “swift and informal dispute resolution”.
The FOS said: “We are disappointed with today’s judgment. We are carefully considering what it means for the cases affected, as well as the wider implications.”
The decision is expected to reduce the scope for consumers to bring complaints to the FOS over “unfair lending” under the Consumer Credit Act 1974.
During the case, banks argued that the FOS approach could have broad effects on older loans.
Santander gave evidence that complaint volumes against the bank had increased under the wider interpretation of the time limit.
In a statement to Retail Banker International, a NatWest spokesperson said: “NatWest has a long history of working productively with the Financial Ombudsman Service and supporting the important dispute resolution service that it provides to customers.
“After discussions with the FOS failed to resolve its concerns, NatWest reluctantly concluded that it had no option but to join with other lenders in bringing this case to confirm how rules on time limits should be applied to certain types of complaints.
“NatWest welcomes the court’s decision, which delivers clarity for customers on the relevant deadline for bringing complaints.”
A spokesperson from Santander also responded to Retail Banker International as saying: “We welcome the judgment of the Administrative Court, which provides the clarity we sought regarding the FOS’s jurisdiction to consider consumer complaints. We are pleased the Court has agreed with the position we have adopted consistently.”
Barclays noted it was pleased with the decision, the news publication added.
