The Court of Appeal recently analysed a swap mis-selling complaint submitted by the Claimant under the FCA Dispute Resolution scheme (“DISP”), which complaint would stop time running for the purposes of a making a complaint to the Financial Ombudsman Service (“FOS”). In holding that the Claimant had not made a valid complaint, the claim against Lloyds for breach of statutory duty was dismissed.
This case Clive Davis v Lloyds Bank  EWCA Civ 557, concerned redress arrangements put in place by banks to compensate customers who were victims of mis-selling. The Claimant bought two interest rate swaps in 2002 and 2005 from Lloyds Bank PLC. After participating in the bank’s review process, the Bank offered him compensation. The Claimant accepted the redress offer in relation to the 2002 swap but not the 2005 swap and rejected this offer. The 2005 swap became the subject of the Claimant’s litigation against Lloyds.
The Claimant argued that he had made a complaint under DISP and secondly that the bank owed him a statutory duty to consider the complaint in accordance with the terms of the review and as agreed between the bank and the FCA.
DISP 1.4.1R of the FCA Handbook provides for complaints to be assessed fairly, consistently and promptly and the Claimant argued that the bank failed to comply with the terms of the review process and that failure was a breach of their statutory duty.
The Court considered the following issues:
1. “Did the Claimant make a complaint under DISP in relation to the sale of the interest rate hedging products which are the subject matter of the proceedings?”
2. “If so, was the Bank bound by the statutory duties under DISP 1.4.1R to assess the Claimant’s purported complaint in accordance with the terms of what had been agreed between the Defendant and the Financial Conduct Authority regarding the Defendant’s review process into interest rate hedging products?”
The Court of Appeal agreed that issue 2 would only be considered if the Claimant had made a complaint to DISP. The High Court had found that, with reference to the FCA rules on what would constitute a complaint under DISP, no complaint had been made by the Claimant in respect of the 2005 swap.
The Claimant contended that his participation in the review scheme was a result of his complaints in respect of both swaps. The Court of Appeal held that acceptance of an invitation to participate in the review and subsequent conduct cannot be treated as a complaint. The Court of Appeal analysed the communications in the review process between the Bank and the Claimant and held that the Claimant had not expressed dissatisfaction for the product he was sold and DISP in the FCA Handbook is defined as “any oral or written expression of dissatisfaction”. The Claimant referred to being better off without the product but this did not constitute dissatisfaction. Issue two did not need to be considered in light of the conclusion and the claim was dismissed.
This case highlights instances where it is not so straightforward to identify when a complaint satisfies the DISP definition and triggers the complaint handling rules.
What is DISP?
The FCA’s dispute resolution complaints scheme is referred to as DISP and outlines how complaints should be dealt with by firms, payment service providers, electric money issuers, and the Financial Ombudsman Service.
What are the DISP complaint rules?
Investigating, assessing and resolving complaints
(1) investigate the complaint competently, diligently and impartially, obtaining additional information as necessary;
(2) assess fairly, consistently and promptly:
taking into account all relevant factors;
(3) offer redress or remedial action when it decides this is appropriate;
(4) explain to the complainant promptly and, in a way that is fair, clear and not misleading, its assessment of the complaint, its decision on it, and any offer of remedial action or redress; and
(5) comply promptly with any offer of remedial action or redress accepted by the complainant.
(1) all the evidence available and the particular circumstances of the complaint;
How does DISP affect FOS?
Customers have six months from businesses sending a final response to a complaint to escalate the complaint to FOS and six years from the event being complained about.
Knowing when a complaint is made under DISP is important for the purposes of time limits when complaining to the Financial Ombudsman Service. A business can consent to waive the time limits (DISP 2.8.2).
Our Mis-sold Swap Lawyers get the best results
We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in swaps mis-selling cases. We assist by:
- Issuing legal proceedings & drafting documents/pleadings to support the mis-selling claim;
- Assisting you in preparation of evidence to support your mis-sold interest rates swap case;
- Appointing the right derivatives and hedging experts to ensure the best chance of success in litigation;
- Appointing forensic accountants to assess and report on the refunds and consequential losses due;
- Liaising with the bank and the Court and/or the Financial Ombudsmen Service;
- Providing first class Court representation and advocacy; and
- Developing (and aiding implementation of) strategies that allow the business to continue.
Please note: Claims Management Companies are regulated by the Ministry of Justice and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs.