MORTGAGE AGENCY SERVICE NUMBER FIVE LIMITED (R on the application of) v FINANCIAL OMBUDSMAN SERVICE LIMITED

The Financial Ombudsman may investigate complaints about interest charges falling within the applicable time limit, even where the rate charged was set partly by earlier decisions. Earlier rate variations may be considered as background or context when deciding whether later charges were fair and reasonable. This does not confer jurisdiction to determine time-barred complaints or to award redress for earlier losses.

The Ombudsman may identify the substance of a complaint and determine what matters are relevant to it. Judicial review does not permit the court to substitute its own assessment of fairness, provided the Ombudsman’s approach is lawful and rational.

The claimant sought judicial review of a Financial Ombudsman’s jurisdiction decision concerning an interest-only mortgage. The Ombudsman accepted jurisdiction over complaints about interest charged from 31 October 2012, but stated that she would review the mortgage’s interest-rate history from its reversion to the standard variable rate in December 2008.

The claimant argued that this unlawfully reopened complaints about pre-October 2012 rate variations. The central issue was whether historic rate-setting decisions could be considered as context when determining the fairness of later interest charges under the Ombudsman’s statutory and regulatory jurisdiction.

1. Application dismissed. The Ombudsman had accepted jurisdiction only over complaints concerning interest charges after 31 October 2012. She had rejected complaints about earlier interest-charging events and could not award redress for losses arising before that date.
2. The Ombudsman was entitled to understand the complaint as concerning the fairness of monthly interest charges. Each charge was an act, and a failure to alter the applicable rate before a monthly charge could be an omission. The claimant could not recast the complaint as one solely about the earlier setting of the standard variable rate.
3. Under section 228 of the Financial Services and Markets Act 2000 and DISP 3.6.1 R, the Ombudsman was required to determine the in-time complaint by reference to what was fair and reasonable in all the circumstances. That broad discretion permitted consideration of historic rate variations as background, context and potentially relevant contributing factors.
4. Considering earlier variations did not amount to entertaining a time-barred complaint under DISP 2.8.2 R or paragraph 17 of Schedule 17 to the Financial Services and Markets Act 2000. The earlier events were relevant evidential or contextual material, not independent complaints within the Ombudsman’s jurisdiction.
5. The court would not substitute its own view of fairness for that of the Ombudsman. The proposed investigation was neither irrational nor unlawful. Questions concerning the evidential effect of missing records or earlier Ombudsman decisions were matters for the eventual merits determination.