Davis v Lloyds Bank Plc

A communication qualifies as a DISP complaint only if, objectively assessed, it contains every element of the FCA Handbook definition, including dissatisfaction about the provision of a financial service which has caused, or may cause, the complainant financial loss, material distress or material inconvenience. Participation in a voluntary customer redress review does not itself constitute a DISP complaint. The review process and the ordinary DISP regime are separate. The confidential agreement establishing the review is not incorporated into the statutory obligation to assess DISP complaints fairly, consistently and promptly.

The claimant sought approximately £30 million from the defendant bank for alleged breach of statutory duty under section 138D of the Financial Services and Markets Act 2000. The claim concerned the bank’s handling of a review of two interest-rate swaps conducted under a confidential agreement with the FCA.

Two preliminary issues were tried: whether the claimant had made a DISP complaint concerning the 2005 swap; and, if so, whether the bank’s statutory DISP duties required it to assess that complaint in accordance with the review agreement. The court determined both issues.

1. Issue 1. The claimant had not made a DISP complaint. The definition required an expression of dissatisfaction, whether justified or not, about the provision or failure to provide a financial service, alleging financial loss, material distress or material inconvenience. Each element was essential. The communications showed an attempt to participate in the review and to establish whether any loss had been suffered, rather than dissatisfaction that the swaps had caused loss. The claimant’s uncommunicated intention was immaterial.
2. The bank’s treatment of the 22 May 2014 communication as an out-of-scope complaint did not alter that conclusion. Such a challenge concerned exclusion from the review, not the provision of a financial service causing loss. Consistently with Mazarona Properties Ltd v Financial Ombudsman Service [2017] EWHC 1135 (Admin), it did not meet the legal definition of a DISP complaint.
3. The review was a customer redress arrangement, not a substitute for the ordinary DISP entry process. The court accepted the distinction, identified obiter in Day and Galpin (t/a Appledore Clinical Services) v Barclays Bank plc [2018] EWHC 393 (QB), between communications constituting a complaint and later communications providing material for its resolution.
4. Issue 2. On the assumption that a DISP complaint had been made, the review agreement was not incorporated into DISP 1.4.1R. The agreement was a confidential contractual arrangement between the FCA and the bank, imposed for the review’s defined purpose, and expressly gave customers no enforcement rights. The DISP rules did not say that its detailed methodology applied to DISP complaints; the review was not FCA guidance; and the agreement expressly disclaimed wider application. CGL Group Ltd v Royal Bank of Scotland plc [2017] EWCA Civ 1073 and Holmcroft Properties Ltd v KPMG LLP [2018] EWCA Civ 2093 supported the conclusion that the review was separately enforceable by the FCA and did not displace ordinary legal remedies.
5. Both preliminary questions were answered No. The claimant therefore could not pursue the pleaded statutory-duty claims.