Standstills, FOS and time limits

FOS applies its own time limits when considering complaints.

However, time for limitation purposes in law does not stop running whilst a complaint is before FOS and so if a complainant later seeks damages before the Court, there could be limitation issues.  In these circumstances a complainant may invite a firm to enter into a Standstill Agreement; the firm in these circumstances needs to be careful as to the scope of the Standstill Agreement.  I have recently blogged on this issue following a Court of Appeal decision.

FOS Time Limits

FOS cannot consider a complaint if it is referred to it: more than 6 months after the date of the final response or redress determination; or, more than 6 years after the event complained of; or, if later, 3 years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause to complain (DISP 2.8.2.).

Perhaps confusingly, the very end of DISP 2.8.2 says "...unless the complainant referred the complaint to the respondent or to the Ombudsman within that period".  So the complaint is deemed referred to the FOS even though it has only been referred to the firm.  In other words, what DISP 2.8.2 actually does (albeit it in a very round-about way), is set a time limit for the complainant to refer a complaint to the FOS or the firm.  DISP 1.8, in turn, allows a firm to reject a complaint if it 'receives a complaint which is outside the time limits for referral to the FOS'.

However, FOS does have discretion to waive these limitation periods in “exceptional circumstances”, or the parties can themselves consent to waive the time limit.  FOS has defined “exceptional circumstances” as including situations where a complainant is incapacitated or where a complainant makes an administrative error, it does not include circumstances where the complainant simply has a change of heart.

If a firm agrees to waive a time limit they must say so in their final response letter.  If a firm fails to refer to the 6-month time limit for a complainant to refer the matter to FOS, the final response letter is invalid and the 6-month period does not apply.

When might a Standstill be needed?

It is unlikely that a complainant will invite a firm to enter a Standstill Agreement with regard to its complaint before FOS given that a complaint only has to be referred within the 6-month period after the final response letter. The complainant and/or the firm could simply ask FOS to postpone consideration of the complaint once referred.

In any event, a complainant may invite a firm to enter a Standstill Agreement to preserve its claim before the Court; as time for limitation purposes continues to run whilst a complaint is dealt with before FOS.  This may particularly be the case where there is a dispute over FOS’ jurisdiction to hear a complaint (for example in tax disputes).

It is important in these circumstances for firms to ensure that the scope of the Standstill Agreement does not stop time running for limitation purposes for allegations outside of the complaint actually made.

I have recently blogged on this issue in the context of a solicitors negligence claim and the Court of Appeal's decision offers a timely lesson to all professionals that they should seek to draft the wording of any Standstill Agreement tightly to preserve future limitation arguments.