Background
Four major UK retail banks — Barclays, NatWest, Vanquis, and Santander — sought judicial review of decisions made in July 2024 by the Financial Ombudsman Service (FOS) asserting jurisdiction over the entirety of their respective customers’ credit relationships, including conduct stretching back well beyond the standard six-year time limit in the FCA’s Handbook rule DISP 2.8.2R. In each case, a consumer complained that their credit card or overdraft relationship was unfair under section 140A of the Consumer Credit Act 1974. The FOS acknowledged it had adopted a new legal interpretation following a “review of its approach to the legal question of the scope of its jurisdiction,” drawing principally on the Supreme Court’s 2023 decision in Smith v Royal Bank of Scotland plc [2023] UKSC 34 and the earlier Supreme Court decision in Plevin v Paragon Personal Finance Limited [2014] UKSC 61.
From those decisions, the FOS derived what it called a “corrective responsibility”: the proposition that a creditor bears a continuing obligation to correct unfairness in a subsisting credit relationship, and that each day of uncorrected unfairness constitutes a fresh “event complained of” under DISP 2.8.2R. On that basis, the FOS concluded that no complaint about a live credit relationship is ever time-barred, and that it had jurisdiction to investigate and award redress across the full history of the relationship. The case attracted a historically significant intervention: the Financial Conduct Authority — the statutory regulator that drafted and owns the DISP rules — intervened in opposition to the FOS’s position, the first known instance of the FCA doing so against the ombudsman service it oversees.
Permission to bring judicial review was granted by Macdonald J in February 2025. The claims were heard by Mr Justice Dexter Dias in July 2025 and March 2026, with judgment handed down on 24 June 2026. The FCA characterised the FOS’s new stance as a fundamental legal error that unlawfully expanded the ombudsman’s compulsory jurisdiction beyond the limits Parliament and the FCA had prescribed.
The Court’s Holding
Mr Justice Dexter Dias quashed all four FOS jurisdiction decisions. On Ground 1 — the central legal challenge — the court held that the FOS’s “corrective responsibility” theory was wrong in law. The Supreme Court’s analysis in Smith addressed when a cause of action under section 140A of the CCA 1974 accrues for the purpose of civil court proceedings; it did not govern, and could not be transposed to determine, when a complaint is “in time” under the FOS’s separate and distinct regulatory time-limit rule in DISP 2.8.2R. Similarly, nothing in Plevin supported the proposition that a creditor’s failure to correct unfairness constitutes a standalone “act or omission” — a fresh qualifying event — capable of resetting the DISP complaint clock. The court emphasised the vital distinction between (a) considering the entire history of a credit relationship when assessing whether it is fair under section 140A, which ombudsmen may legitimately do, and (b) exercising investigative and remedial jurisdiction over conduct outside the statutory time limit, which requires an independent in-time event.
The court also rejected the FOS’s alternative “Route 2” case, which sought to found jurisdiction over the whole credit relationship on the basis of discrete acts falling within the six-year window. On Ground 2, Barclays’ Article 1 Protocol 1 ECHR argument was addressed, and the court considered but rejected the FOS’s section 31(2A) Senior Courts Act defence against the grant of relief. Quashing orders were granted in respect of all four decisions.
Key Takeaways
- The FOS cannot use the Supreme Court’s limitation analysis in Smith v Royal Bank of Scotland to extend its complaint jurisdiction: Smith governs accrual of causes of action in civil litigation, not the FOS’s separate DISP time-limit regime.
- A creditor’s alleged ongoing failure to “correct” unfairness in a continuing credit relationship does not constitute a fresh “event complained of” under DISP 2.8.2R — the concept of “corrective responsibility” has no valid basis in the relevant case law.
- Ombudsmen may assess the full history of a credit relationship when judging overall fairness under section 140A CCA 1974, but this is analytically distinct from exercising jurisdiction (investigation and redress) over time-barred conduct.
- The FCA’s unprecedented intervention against the FOS was vindicated: the statutory regulator’s own construction of the DISP rules it authored prevailed over the ombudsman service’s novel reinterpretation.
Why It Matters
This ruling has immediate, large-scale practical consequences. Santander alone reported that its FOS complaint volume more than doubled — from 31,000 to 71,000 — after the FOS adopted its new jurisdictional stance; Barclays warned of “huge consequences in thousands of cases.” By rejecting the FOS’s expanded interpretation, the court restores the six-year event-based time limit as a hard jurisdictional boundary, significantly curtailing the volume of historic credit complaints that can be pursued through the ombudsman service. For UK banks and consumer credit providers, the decision provides substantial relief from open-ended retrospective liability across the full life of long-running credit relationships.
Beyond its immediate financial impact, the case marks a constitutional landmark in UK financial services regulation: the first judicial confrontation between the FCA and the FOS over the legal limits of the ombudsman’s own jurisdiction. The court’s affirmation that the FOS is not “the master of the limits of its jurisdiction,” and that the regulator’s authoritative interpretation of its own delegated rules takes precedence, will shape the institutional relationship between these two bodies for years to come. Practitioners advising on consumer credit disputes or FOS proceedings will need to recalibrate their understanding of how Smith and Plevin operate in the complaints context following this authoritative ruling.