changes to the time limits for making a complaint

With effect from 1 February 2003, the time limits for making a complaint to the ombudsman service have changed.

The Financial Services Authority (FSA) consulted on these changes in December 2002 and the results of that consultation were published in January 2003 in the FSA’s policy statement, ‘Mortgage endowment complaints: Changes to time limits for making a complaint – Feedback on CP158 and made text’. Full details are on the FSA’s website [www.fsa.gov.uk] but we summarise here the three key changes. The first two affect all complaints made to us; the third relates solely to mortgage endowment complaints.

The first change affects the rules at DISP 2.3.1R (1)(c) that say that the ombudsman cannot normally consider a complaint if the complainant refers it to us:

more than six years after the event complained of; or

(if later) more than three years from the date on which they became aware (or ought reasonably to have become aware) that they had cause for complaint.

This rule has now been amended so that a complainant who might otherwise be out of time when they come to the ombudsman will be in time if they:

referred their complaint to the firm concerned within the time limits; and

have a written acknowledgement or some other record that the firm received the complaint.

The second change amends the rules at DISP 2.3.1 R (2) so that the ombudsman can consider complaints outside the time limits if the firm has not objected to this.

In view of this, if firms wish to assert that a complaint falls outside one of the time limits laid down in the rules, we will expect them to do this as early as possible in the complaints process. We will remind them of the need to do this in our initial letter that tells them we will be dealing with the complaint and asking for their files on the case. Even where a complaint is referred outside the time limits and a firm raises an objection to our investigating the case, we may still do so if the complainant’s failure to comply with the time limits was, in our view, the result of exceptional circumstances.

The third change relates only to mortgage endowment complaints. New rules have been inserted (mainly at DISP 2.3.6 R (1)). In essence, these say that the time limits (at DISP 2.3.1 R (1)(c)) for mortgage endowment complaints start to run from the date the complainant receives a letter from the firm warning that there is a high risk that when the policy matures, it will not produce a large enough sum to repay the target amount. These letters are known as ‘red’ re-projection letters.

The time limit is extended so that it ends six months from the date when the complainant receives a second re-projection letter from the firm, containing the same warning or other reminder of the need to act. The second letter need not, therefore, be a ‘red’ re-projection letter.

However, the rules envisage that there are still circumstances where it is possible for firms to assert that the time limits specified in the rules started before the complainant received the first ‘red’ re-projection letter. This may be because the complainant was previously sent a contractual review letter following, say, the tenth policy anniversary.

But if the firm does assert this, it will need to show that the complainant received an individualised calculation using the regulatory growth rates that were used for illustrations at the time. The calculation must have indicated that the policy was expected to produce a shortfall. And the letter must also have encouraged the complainant to take appropriate action.

If a firm wishes to rely on such evidence of a complaint being out of time, we would expect it to bring this to our attention at the earliest opportunity, before our investigations begin.