time limits

Following our article in the March 2003 edition of ombudsman news about changes to the time limits for making a complaint, we now feature two case studies involving time limits. But it may be helpful if we first re-cap the changes.

It is important to note that, in all instances, it is for the ombudsman service, not firms, to decide whether a complaint is out of time.

The first of the changes affects the rules that say that we 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 so that we can consider complaints that are outside the time limits if the firm has not objected to this.

The third change relates only to mortgage endowment complaints. In essence, the time limit for these complaints starts to run from the date the complainant receives a ‘red’ re-projection letter (a letter from the firm warning of a high risk of the policy failing to produce enough, when it matures, to repay the target amount).

If it gives the complainant more time, then this time limit is extended to six months after the date the complainant received a second ‘re-projection’ letter containing the same warning or other reminder of the need to act.

However, the rules allow a firm, in some circumstances, to assert that the time limits should start before the complainant received the first ‘red’ re-projection letter. If the firm does assert this, it will need to show, among other things, that the complainant received an individualised calculation using the growth rates set down by the regulator for use in illustrations at that time.

case studies – time limits

28/1
time limits – mortgage endowment policy complaint – complaint ‘out of time’

Mr and Mrs F complained to the firm about the mortgage endowment policy it sold them. When it rejected their complaint, the firm said it was unlikely that we would be able to look into the matter because the couple had left it so long to complain.

complaint outside jurisdiction
The firm argued that the complaint was ‘out of time’ because it was more than three years since it had sent Mr and Mrs F a ‘ten-year contractual review’ letter. This letter had said that the endowment might not produce enough when it matured to repay the mortgage. The firm said the date when the couple received this letter marked the beginning of the period when they ought reasonably to have been aware that they had cause for complaint.

We needed to check that the letter sent was in line with the regulator’s guidance in that it:

provided an individual calculation, indicating the amount of the expectedshortfall (using the growth rates set down by the regulator for use in illustrations at that time); and
urged the couple to take appropriate action.

As the letter met these requirements, we agreed that the time period started when the couple received the letter. Mr and Mrs F had not complained to the firm or to us within three years of receiving the letter, and they could provide no satisfactory explanation for not doing so. We therefore considered the complaint to be ‘out of time’, so we were unable to deal with it.

.......................................

28/2
time limits – mortgage endowment policy complaint – re-projection letters not fully compliant so complaint not ‘out of time’

After Mr and Mrs D complained unsuccessfully to the firm about its sale of a mortgage endowment policy, it told the couple that they had probably left it too late to refer their complaint to us.

complaint within jurisdiction
In the firm’s view, the complaint was ‘out of time’ because more than three years had elapsed since Mr and Mrs D had received ‘red’ re-projection letters.

However, when we looked into the matter, we found that the letters (sent in 1995 and 1997) had only partly complied with the regulator’s guidance. They both contained individualised calculations that used the correct growth rates for illustrations at that time. And both letters indicated that a shortfall was possible. However, neither mentioned the need for the couple to take action.

We therefore decided that the time period could not begin from the date when the couple received these letters. The complaint was not ‘out of time’ and we were able to consider it.

.......................................