John Taylor KC, instructed by Pinsent Masons and TLT, acted for NatWest and Vanquis banks in successfully challenging by way of judicial review the jurisdictional time-bar decisions of the Financial Ombudsman Service (“FOS”) made in the context of complaints arising out of allegedly unfair credit relationships.

Four banks – NatWest, Vanquis, Barclays and Santander – each brought separate judicial review proceedings against FOS challenging its decisions on the time-bar provision in DISP 2.8.2R, which provides that customer complaints are time-barred if they are made “more than six years after the event complained of”. The claims were heard together and, given their significance to the banking industry, the FCA was granted permission to intervene.

The complaints concerned so-called irresponsible lending claims on overdrafts and credit cards in which the customers alleged that the banks had lent to them without undertaking appropriate affordability assessments. The customers claimed the interest and charges they had paid on that borrowing, which dated back to the commencement of the credit relationship. In the NatWest and Vanquis claims, all the credit increases took place more than 6 years before the complaints were made, and in the NatWest claim the complaints dated back to lending decisions made in the last century. The banking industry faces tens of thousands of such complaints every year, often brought by claims management companies.

FOS decided that it had jurisdiction over the entirety of the complaints. It contended (inter alia) that the Supreme Court decisions in Plevin v Paragon Personal Finance [2017] 1 WLR 1249 and Smith v RBS [2024] AC 955 on the unfair relationship provisions in s140A Consumer Credit Act 1974 placed the banks under a “corrective responsibility”. The consequence, FOS said, was that once an unfair relationship was created, the banks were obliged each day thereafter to correct that unfairness; and each day there was a failure to correct existing unfairness there was a fresh “event” within DISP 2.8.2R. Based on this reasoning, FOS decided that time did not start to run under DISP 2.8.2R until the credit relationship ended, which produced the same result as if the customer had brought a claim in the County Court under s140A CCA.  

The banks challenged FOS’s decisions by way of judicial review and this challenge was upheld by Mr Justice Dexter Dias in a judgment dated 24 June 2026 here. The judge’s reasons included that:

  • FOS’s jurisdiction to determine complaints is derived from its power to investigate and if appropriate grant redress in accordance with sections 226-229 of FSMA 2000 and the DISP Rules. Under s228 FSMA, FOS decides what is “fair and reasonable in all the circumstances”. When making that assessment on the merits, FOS will under DISP 3.6.4R take into account relevant law which includes s140A CCA. But FOS’s jurisdiction is not derived from s140A CCA.
  • Accordingly, the regime under the Limitation Act 1980 to the unfair relationship provisions in s140A CCA is distinct from the time-bar provisions in DISP 2.8.2R. 
  • The dicta in Smith and Plevin relied on by FOS were about how a credit relationship may be classified as unfair through omission. They do not establish a positive responsibility to correct unfairness thereafter, the breach of which creates a fresh “event” for limitation purposes. The fact that a relationship may remain unfair if not corrected is not the same as the court creating a rule whereby a creditor has a positive responsibility to correct, with each failure to do so resetting the limitation period.
  • The ordinary and natural meaning of “event” is a one-off occurrence, even if it extends over time. The statutory purpose behind DISP 2.8.2R – excluding stale complaints – is achieved simply by requiring time to run from an identified and readily identifiable act or omission within 6 years of the complaint.
  • Following R (Mazarona Properties Ltd) v FOS [2017] EWHC 1135 (Admin), an additional reason for quashing FOS’s decisions was that the redress of the unfairness created by the provision of a financial service (credit facilities) is not itself a “financial service” at all.
  • FOS’s discretion under DISP 3.7.2R and 3.1.1G to award fair redress did not entitle it to award compensation in respect of out-of-time events. A wide discretion in granting redress is not the same as redress over a wide range of events.

The Court quashed FOS’s jurisdiction decisions and directed that FOS decide jurisdiction in accordance with the Judgment.