The topic of time-barring has long been a thorny issue. Members in the high-cost short-term credit industry will probably remember the battles with the Ombudsman over the three-year time period under DISP 2.8.2R(2)(b). This led to the Ombudsman publishing ‘Lender C’ and ‘Lender D’ decisions (whatever happened to Lender A and B is a mystery!). Those posed practical problems for firms.

But many years later there was a new battle involving prime lenders. This one considered the six-year time-barring rule in DISP 2.8.2R(2)(a). This says that the Ombudsman cannot consider a complaint if the complainant refers it to the Financial Ombudsman Service “more than … six years after the event complained of”.

For many years, and in the context of irresponsible lending complaints, the Ombudsman had considered this six-year period started no later than the date of the agreement. This was clearly the latest date that the ‘event’ (ie the decision to lend) could have happened. But in an about-turn which would make any politician envious, the Ombudsman changed its mind and decided that the ‘event’ occurred every day until the customer’s relationship with the lender ended. The Ombudsman’s reason? It was consistent with the Supreme Court’s approach in Plevin v Paragon Personal Finance Ltd [2013] UKSC 61 and in Smith v Royal Bank of Scotland plc [2023] UKSC 34.

our lenders were understandably unhappy with that approach and applied to the High Court to judicially review it. They found the Ombudsman’s approach was unlawful. The Court held:

• It is “open to an ombudsman to conclude that the essence of a complaint is about an unfair relationship, even if an individual customer has not expressly voiced the complaint in such a way”. But that did not remove the need to apply the jurisdictional rules (where the Ombudsman has no discretion).
• The choice of the word “event” rather than “accrual of complaint” or “cause of complaint” was not a matter of careless drafting or inadvertence.
• Non-correcting any unfairness is not an event for the purposes of DISP 2.8.2R.
• The Ombudsman’s approach to jurisdiction (which it called a “corrective responsibility” approach: a requirement for a creditor to correct the unfairness which arose in the relationship) was wrong in law.
• The proper approach to DISP 2.8.2R(2)(a) is that acts exceeding six years before a complaint can be considered (a) by way of background and (b) in determining whether a remedy for an in-time act is appropriate, and if so, what is fair and reasonable. However, events preceding the six-year period cannot receive a separate remedy of their own.

Each of the Ombudsman’s decisions was therefore quashed meaning they need to be decided again.

It’s good news. The Ombudsman cannot consider a complaint where more than six years have passed since the ‘event’ before the complaint was made to the Ombudsman under DISP 2.8.2R(2)(a) (ie the six-year period). An “event” is an “act or omission”.

So the future has gone back to the past: the question for DISP 2.8.2R(2)(a) will be to consider what ‘event’ the customer is complaining about and then if more than six years have passed. The approach of applying the limitation period for claims under the unfair relationship provisions is not, therefore, the test (which is what the Ombudsman said in Lender C and D).