We have had recently some further feedback about our decision not to introduce a 15 year ‘long-stop’ in the Dispute resolution sourcebook (DISP). Some firms have indicated that they propose to insert a ‘long-stop’ clause into their Terms of Business. If you are considering this please read our update…

Update

15 year “long-stop” on bringing complaints against financial services firms

Our position on the “long-stop” was set out very clearly in FS08/6:

“We gave very careful consideration to certain other proposals, including the introduction of a ‘long-stop’ time limit on the period within which complaints must be brought.  We concluded that we should not consult on introducing a ‘long-stop’ because we have been unable to demonstrate that it would bring additional benefits to both consumers and firms, for example an increase in investment in the sector to the benefit of consumers, resulting from reduced uncertainty over liability.”

We recognised that many in the industry would be disappointed by this decision. It has now come to our attention that some firms may consider inserting a ‘long-stop’ clause in their Terms of Business.

One of the key functions of our regulatory regime is to protect consumers:  a ‘long-stop’ clause may be inconsistent with that regime if it seeks to exclude or restrict any liability a firm may have to a consumer. 

More specifically. such a clause:

• is likely to becontrary to the rule in COBS 2.1.2R , ICOBS 2.5.1R and MCOB 2.6.2R (Exclusion of liability);
• may also fail to meet Outcome 6 of our Treating Customers Fairly (TCF) initiative:
  “Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.”
• may be contrary to the Unfair Terms in Consumer Contracts Regulations 1999, and in that case the term would not be binding on the consumer;
• would not be binding on the Financial Ombudsman Service (FOS), which would still have to consider complaints presented to them within the time-limits indicated in DISP.

We would not consider acceptable any approach by a firm which purported to exclude or restrict a customer’s right to pursue a complaint against a firm with the FOS or before the courts. Accordingly, we would expect to take follow-up action with any firm adopting this course.