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ombudsman news

issue 16

May 2002

time bars

In the February 2001 issue of ombudsman news we explained the revised policy on time limits for cases referred to the PIA Ombudsman Bureau, following the cases of Brocklesby - v - Armitage Guest and Liverpool Roman Catholic Archdiocese Trustees - v - David Goldberg QC. We also mentioned that those two cases had been confirmed by the Court of Appeal in Cave - v - Robinson Jarvis & Rolf, decided in the Court of Appeal on 20 February 2001.

That Court of Appeal decision was overturned by the House of Lords on 25 April 2002, when it also over-ruled the reasoning in the Brocklesby case relating to deliberate concealment under the Limitation Act 1980.

The time limit rule for PIA Ombudsman Bureau complaints incorporated the rules relating to deliberate concealment under Section 32 of the Limitation Act. Since the interpretation of that section has now changed, the cases that the Financial Ombudsman Service is now dealing with (that would formerly have gone to the PIA Ombudsman Bureau) are affected.

Put briefly, under the former interpretation of Section 32 in the Brocklesby case, nearly all customers alleging a breach of the duty to give the most suitable advice had six years in which to make a complaint, from the time they realised there had been a breach of duty. The limitation period was suspended until the point when the customer made that realisation (or could with reasonable diligence have done so).

Now, following the House of Lords' decision in Cave - v - Robinson Jarvis & Rolf, the limitation period cannot be suspended in cases involving deliberate concealment unless it can be established that:

  • any fact relevant to the complaint was concealed from the customer, either by a positive act of concealment or by withholding relevant information with the intention of concealing the fact or facts in question; or
  • the firm knew it was committing a breach of duty or intended to do so, in circumstances where any such breach of duty was unlikely to be discovered for some time.

This is a much narrower test than was previously the case and the difficulty now is that we are currently dealing with a number of former PIA Ombudsman Bureau complaints that would be outside our jurisdiction if we were to apply the more restrictive test.

The PIA Ombudsman Bureau's policy was to apply the limitation defence only if the firm asked it to do so. A number of firms choose not to ask it to apply the defence. So we think it would be most unfortunate if firms were now to ask us to apply the narrower interpretation to complaints we are currently investigating that - when we began to look into them - properly fell within our jurisdiction.

We believe that we should continue dealing with these complaints if at all possible, even where - strictly speaking - firms could prevent us from doing so by pleading the revised limitation defence. So any firm that wishes to take advantage of this reinterpretation in any particular case must write and tell us this. Otherwise, we will proceed with our investigation as before.

Walter Merricks, chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.