High Court maintains time bar for complaints against financial institutions

The High Court has recently clarified the extent of Financial Ombudsman Service (“FOS”) jurisdiction over historical claims, confirming that they cannot assert jurisdiction over complaints about events that fall outside the six-year time bar in DISP 2.8.2R. The FOS had drawn on decisions made in the courts to assert jurisdiction over alleged unfair credit relationships where the acts complained of took place more than six years ago. The High Court rejected this, concluding that the FOS had erred in law and overturning its decisions following an unprecedented intervention by the FCA against the FOS.

This judgment is significant because it confirms that the FOS's jurisdiction is defined and constrained by the relevant FCA rules. The decision provides welcome certainty for financial services firms, limiting what could otherwise have become an open-ended liability for historic complaints.

Background

Four banks — NatWest, Vanquis, Barclays and Santander — applied for judicial review of FOS decisions made in July 2024. The decisions arose in the context of consumer complaints relating to credit card and overdraft facilities. The complainants alleged they had been offered unaffordable lending and their relationships with the respective lenders had therefore been unfair (in breach of s.140A of the Consumer Credit Act 1974.

In each case, the conduct at the heart of the complaints — principally the granting of, or successive increases to, credit facilities — pre-dated the six-year time limit for complaints about an ‘event’ prescribed in DISP 2.8.2R. The complaints were therefore prima facie time barred.

Notwithstanding this, the FOS asserted jurisdiction over each credit relationship in its entirety, having changed its approach to jurisdiction following the Supreme Court decision in Smith v Royal Bank of Scotland plc [2023] UKSC 34. Before the High Court it advanced a novel "corrective responsibility" argument derived from the Supreme Court's decisions in Smith and Plevin v Paragon Personal Finance Limited [2014] UKSC 61. On this argument, where an unfair relationship is established for the purposes of the Consumer Credit Act 1974, the creditor bears a continuing responsibility to remove or redress that unfairness. Any failure to do so would constitute a fresh ‘event’ about which a consumer may complain under DISP, with time running only from the end of the credit relationship. This was said to confer on the FOS jurisdiction to investigate and order redress in relation to the fairness of the credit relationship throughout its duration.

The Court's Findings

The court rejected the concept of corrective responsibility. It held that Plevin, in recognising the concept of  creating an unfair relationship by omission does not create a positive continuing obligation to correct any unfairness, and that Smith provides no support for the proposition that a corrective responsibility exists or that each failure to correct constitutes a fresh event for the purposes of DISP 2.8.2R. There was therefore no extension of the DISP time limit. The FOS retains discretion to consider the historic credit relationship as background context when assessing the fairness of an in-time event, but that discretion does not extend to bringing acts or omissions outside the DISP time limit within scope for assessment of redress.

Final considerations

Unusually, the FCA intervened in these proceedings, arguing that the FOS had misdirected itself as to the scope of its own jurisdiction. The Court viewed this positively, regarding it as consistent with the FCA's statutory objectives of consumer protection and its strategic objective of ensuring that relevant markets function well. 

The decision comes at a time of broader reform for the FOS, following earlier consultations and HM Treasury's publication in March 2026 of proposals to modernise the consumer redress system. Amendments to FSMA in the Financial Services Bill (currently progressing through Parliament) are intended to bring about greater alignment between the FOS and the FCA in the interpretation of FCA rules and guidance.