Mr A used a claims management company (CMC) to reclaim Payment Protection Insurance (PPI) from his bank in 2012. The bank rejected this complaint in October 2012. The bank did not send the final response letter to the CMC, only to Mr A. The CMC was initially unaware that the claim had been rejected, which lead to confusion over the bank’s final decision. In February 2013, Mr A sent the final response from the bank to the CMC, which confirmed that the claim had been rejected.
Following a bank’s rejection of a claim, there is a six month time limit to refer the case to the Financial Ombudsman Service (FOS) for further consideration. A month after the CMC received a copy of the final response from the bank, they issued Mr A with some forms to complete in order to make the referral to the FOS. The CMC received these forms back from Mr A in mid-April. The CMC then waited until June to make the referral to the FOS. This was outside the six month time limit for referring a case to the FOS resulting in Mr A being out of time from having his claim considered.
The FOS only require the case to be registered within six months. This can be done over the phone and documentation can be sent at a later date. In this case the CMC did not do this.
In a telephone conversation in June 2013 between Mr A and the CMC, the CMC informed Mr A that his claim was with FOS for consideration. The CMC later received a letter from the FOS saying the complaint had been rejected due to it being out of time. The CMC did not do anything with this letter.
Mr A was aware that cases with the FOS can take up to two years to resolve and therefore, believing that his case was with the FOS for consideration, he did not make contact with the CMC until March 2015. Mr A then chased for an update on progress as it had been 21 months since he had been told the case had been submitted to the FOS.
The CMC informed Mr A that his claim was still with the FOS. After this call, the CMC checked with the bank who told them the case had been closed due to being out of time with the FOS. The CMC did not do anything with this information, or contact Mr A again.
In June 2015 the CMC were taken over by a new CMC (CMC 2). CMC 2 reviewed the case and informed Mr A that the FOS had rejected his claim because it was out of time. Mr A complained to CMC 2 because he felt that the original CMC’s delay had resulted in the rejection of the claim. CMC 2 offered Mr A £75 to resolve the issue. Mr A remained dissatisfied and brought his complaint to the Legal Ombudsman.
The Legal Ombudsman’s investigation found that:
- It was reasonable to have expected the original CMC to have considered the FOS deadline as soon as they received confirmation that Mr A’s claim had been rejected. As a CMC dealing with mis-sold PPI claims on a day to day basis, the expiry of the six month FOS deadline would be a key date and Mr A should have been contacted at this stage. The original CMC did not act on information that the claim had been rejected on more than one occasion;
- The original CMC failed to provide updates to Mr A or chase the status of the complaint for 21 months, causing significant delay.
As CMC 2 had taken over the business of the original CMC, they were now liable for the service issues identified. Following our investigation, CMC2 agreed to pay Mr A £400 as recognition of the frustration the poor service had caused. Although we cannot determine if the claim would have been upheld by the FOS, we can evidence that the delay in this case caused frustration at a ‘loss of opportunity’ to get his claim considered by the FOS.
Mr A accepted the £400 offer in resolution to his complaint.
Learning points for CMCs:
This case highlights to CMCs, the importance of:
- Having in place a robust process to chase a lender’s final response when a claim has been made. CMCs should be aware that banks have an eight week deadline in which to provide this response and it is reasonable to expect efforts to be made by the CMC to confirm the bank’s position after this deadline passed.
- Noting key dates in the claims process, particularly a FOS deadline for submitting claims for consideration. To act on information received and to keep the customer updated on the progress of their claim
Learning points for customers:
- It is important to discuss paperwork received from the bank with your CMC as soon as possible to prevent any confusion or potential delay.