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ombudsman news

issue 55

August 2006

leaving it too late ...

The holiday season may be upon us, but it's also the time of year when I have to start thinking about what our workload might look like in the next financial year - to prepare for next year's budget, covering the period to March 2008.

The pattern of mortgage endowment complaints is crucial for us, and one thing is clear. We will be seeing a large rise in disputes that turn on whether firms have correctly applied a time bar, where consumers have left it too late to complain.

For many firms, applying time limits is a matter of being able to draw a line under their liabilities. The FSA, and the Treasury Select Committee, accepted that it would be unrealistic to expect firms to respond to these claims for ever, and that time limits were inevitable.

But for consumers who miss a deadline - particularly when it was not drawn to their attention - a firm's refusal to look at the merits of their complaint generates an understandable sense of grievance.

Firms aren't normally prejudiced by a consumer's delay in submitting a claim, if it's one the firm would have had to meet if it had been submitted in time. But if a firm rejects a claim simply saying it is too late, and the matter is then referred to us - we are restricted to checking whether the firm has applied the time limit rules correctly. If it has done so - then we are unable to look into the complaint.

So absent-minded or disorganised consumers may well be left feeling that they're paying a disproportionate penalty for their failure to meet the time limit - and that firms could be escaping their proper obligations.

When we reject a complaint, we try to give comprehensible reasons. My guess is that next year - however hard we try to explain the position - we will be spending a lot of time giving dissatisfied consumers answers they'll find very difficult to accept.

Time-barred endowment complaints may look open and shut, but their emotional content may be more explosive. And I'm not sure how we'll explain the impact of that to those who scrutinise our budget.

Walter Merricks
chief ombudsman

news update

pension mis-sales outside the pensions review

no change to redress methodology assumptions

In issue 50 of ombudsman news (Nov/Dec 2005) we explained that we had used our "wider implications" process in deciding how to approach the calculation of loss for pension mis-sales not covered by the industry-wide pensions review.

The outcome was that we would continue to use the pensions review methodology, but ask PricewaterhouseCoopers LLP (PwC) to advise on appropriate assumptions. We published the assumptions, fixed as at 1 October 2005, in ombudsman news and on our website.

We recently asked PwC to tell us whether the October 2005 assumptions needed updating. They recommended that the assumptions should not be changed at present. Further details, and PwC's report.

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ombudsman news issue 55 [PDF format]

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.