21Jul

The European Union’s Alternative Dispute Resolution Directive is now in force. This means that, unless they have already done so, firms should alter their final response letter templates and their websites.
If the firm is rejecting a complaint on the grounds that it is time barred (more than six years since the event which the complaint concerns AND more than three years since the client should reasonably have been aware of a problem), then this must be explained to the client in a final response letter.
Mortgage endowment complaints are time barred once three years has elapsed since the client was sent a letter informing them of a likely shortfall.
Final response letters must continue to explain why a complaint is being accepted or rejected, and detail what redress (if any) is to be provided. The letter must now give the website address of the Financial Ombudsman Service (FOS), as well as making the client aware of their right to refer the matter to the FOS. The need to enclose the FOS leaflet with the final response remains.
Firms also now need to decide whether they will consent to the FOS considering time barred complaints about their firm and/or complaints which are referred to the FOS more than six months after the date of the final response.
Specified wording now needs to be included in the final response letter regarding the decisions the firm has taken regarding these issues. There is no scope to vary this wording.
The prescribed wording can be found in DISP 1 Annex 3 of the Financial Conduct Authority’s Dispute Resolution (DISP) sourcebook. The wording to be used depends on which of these sets of circumstances apply:
• The complaint is not time barred, but the firm will not consent to the FOS investigating the complaint if the complainant fails to refer it within six months
• The complaint is time barred, and the firm will not consent to the time barring rules being waived
• The complaint is time barred, and the firm will consent to the time barring rules being waived, but will not consent to the FOS investigating the complaint if the complainant fails to refer it within six months
• The firm does not consent to the FOS considering a time barred mortgage complaint
• The firm consents to waive all applicable time limits

Firms also need to amend their websites so that they contain a link to the FOS website, and give an explanation of the FOS’s services.

Attempting to reject a complaint on the grounds that it is time barred is difficult. For example, a client many complain eight years after a product was sold, but argue that they have only just realised that it may have been unsuitable for them – perhaps because the investment value fell, or they had a claim rejected.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.