# Sunday Times campaign to increase 6 year time limit



## Brendan Burgess (4 Mar 2013)

Niall Brady had an article in yesterday's Sunday Times calling for the 6 year time limit to be changed. 



Many PPI claims have lost out.
Endowment mortgage claims have all lost out.

The Law Reform Commission proposed reforming the Statute of Limitations for financial products to  a two year time limit from when the consumer became aware of the loss - not from the date they bought the product. 

Anyone want to write a Key Post on the topic which could be used as a briefing note for politicians to enourgage them to change the law? 

Anyone want to tell their story of how their claim was rejected because of the six year rule?


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## Niall Brady (4 Mar 2013)

The Sunday Times is campaigning for a change in the law to allow consumers more time to take complaints about mis-selling to the Financial Services Ombudsman and the courts. As the law now stands, they have no redress for endowment mortgages, payment protection insurance or other financial products bought more than six years ago. This is clearly unfair because it takes a lot longer than six years before a problem becomes apparent with long-term financial products such as mortgages, pensions and investments.
The Sunday Times is not claiming that all mis-selling complaints are justified. We do believe, however, that those who claim to be victims of mis-selling have the right to have their cases heard.
Politicians will have to be convinced of the need to change the law including reform of the statute of limitations, which sets the deadline for taking legal action through the courts. The best way to apply pressure is for consumers to come forward and tell how they have been denied justice by the existing interpretation of the six-year rule. There are no guarantees that government will listen to our campaign but, the more people who come forward, the harder it will be for the government to ignore us.
If you are interested in supporting us, please contact money.ireland@sunday-times.ie


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## Niall Brady (4 Mar 2013)

From The Sunday Times, March 3

Time is right to stop banks’ big brushoff
Victims of mis-sold financial products need longer to seek legal redress

Victims of mis-selling are being urged to put pressure on politicians to change laws that block complaints about financial products sold more than six years ago.
The Sunday Times, which is campaigning on the issue, has been inundated by readers who have lost large amounts of money on endowment mortgages, risky borrow-to-invest schemes and payment protection insurance.
The financial services ombudsman has thrown out their complaints because he deals only with products sold in the past six years. Our readers are also being denied justice through the courts after the Supreme Court ruled last year that legal action for alleged mis-selling must be taken within six years of a product being sold.
It often takes much longer than six years for consumers to realise that a product has been missold, by which time it is too late to do anything about it. Banks are being accused of hiding behind the six-year time limit, knowing that it leaves customers with nowhere to take mis-selling complaints.
Bryan Fox of Bryan F Fox & Co solicitors represents a group of borrowers who planned to sue over endowment mortgages. They include a 72-year-old retired businessman who was left with a shortfall of more than €100,000 when his policy matured last year.
Fox’s clients have been forced to abandon their plans, however, because the loans were taken out more than 20 years ago. “The only route left open is the political route,” Fox said. “Nothing can be done through the Irish courts.”
Ireland’s restrictive six-year statute of limitations could be appealed to the European Court of Human Rights. “An appeal to Strasbourg is theoretically possible — but only if you had unlimited amounts of time and money,” said Fox.
Rather than forcing consumers to go to Europe to enforce their rights, the government could change the rules of the ombudsman’s office to allow him adjudicate on complaints about products that are more than six years old. For example, the financial ombudsman service in Britain gives consumers three years from the time they become aware of potential mis-selling to make complaints. 
The government could also open access to the courts by extending the statute of limitations. The Law Reform Commission has proposed introducing a two-year window for legal action involving financial products. This would begin from the time that consumers become aware of a problem — not from the date they bought the product. Alan Shatter, the justice minister, has yet to act on the recommendation.
Endowment mortgages are top of the list of mis-selling gripes among our readers. They were encouraged by lenders to take out these loans in the 1980s and early 1990s as a smarter alternative to traditional annuity mortgages, where capital and interest are repaid over the term of a loan.
With endowment mortgages, borrowers repaid only the interest, while contributing simultaneously to investment policies sold by life insurance companies. These policies or endowments were supposed to repay the amount borrowed at the end of the loan.
Borrowers were told there could even be a windfall if the endowments exceeded their performance targets. According to the Central Bank, endowments accounted for a third of mortgages approved in Ireland between 1989 and 1992.
Many have fallen far short of target, however. The policies would have had to grow by at least 7% each year to be able to repay the related mortgages — a hugely ambitious goal for any investment. Even if this growth was achieved, endowments would still have come up short because of hefty charges and commissions paid to those who sold them.
With many of the mortgages sold in 1989-92 now falling due for payment, borrowers are facing large shortfalls, with some endowments covering only about half of the amount owed.
Endowments accounted for 9% of complaints about investments made to the ombudsman last year, although he did not disclose how many of the policies related to mortgages. None of the 16 cases on which he made a decision in 2012 went in the complainants’ favour, although one was partly upheld.
Michael Noonan, the finance minister, brushed off the endowment mortgage scandal when questioned in the Dail last year. “I have been informed by the Central Bank that, where the proceeds of an endowment policy are insufficient to repay the capital element of an endowment mortgage, borrowers should be given ample time to make alternative repayment arrangements,” he said. “If the policy is not on track to repay the mortgage, the life company will recommend an increase in the premium.”
Increasing premiums gets banks off the hook by eliminating endowment shortfalls. It achieves nothing, though, for borrowers who believe they were mis-sold and now have nowhere to seek redress.

€22,000 shortfall
John from Limerick considered legal action against Bank of Ireland over a shortfall of €22,000 on an endowment mortgage of €43,000 that he must repay later this year. He cannot access the courts, however, because of the six-year statute of limitations. A complaint to the ombudsman in 2011 was also time-barred because the mortgage was taken out in 1988. The Central Bank told him it could not investigate individual complaints, even though hundreds of other endowment policyholders are in the same position.
“The banks know they are well protected by the six-year rule,” John said. “Those with endowment mortgages have been badly treated by the system and the banks.”
He believes his endowment policy could never have repaid the mortgage, even if it met the projected investment growth of 7.5% a year for 25 years, because the charges were so high.
This was why he refused to take the bank’s advice to increase the payments after it warned that the endowment policy would fall short of target. “If I increased the payments, I would only have been solving Bank of Ireland’s problems,” he said.
“They should have to pay the shortfall in full because the endowment policy could never have delivered what was promised.”
Bank of Ireland said it could not comment on individual cases but added: “We annually send customers a written review projecting what the final value of the policy will be.
Where the return/projection shows a shortfall, we advise the policyholder that the premium should be increased.”

Six-year rule ‘protects only the banks’
Noel is canvassing politicians in Co Mayo for support in changing the law that limits the
ombudsman to handling complaints about financial products sold in the past six years.
Noel’s endowment policy is worth €31,074 but he owes €57,139 on the mortgage, leaving a shortfall of €26,065 that must be met at the end of this year.
“We took out the mortgage 20 years ago and it’s still affecting us today,” he said. “The
ombudsman’s six-year rule is ridiculous and serves only to protect the banks.”
Noel had been led to expect a surplus of more than IR£13,000 (€16,500) when the mortgage matured. Irish Life provided the endowment policy in 1993, while the mortgage provider was Irish Life Homeloans, now owned by KBC Bank.
“The surplus was based on the endowment policy growing by 9.25% a year,” said Noel. “I believed this was easily achievable because they told me that growth was much higher than 9.25% in the past.”
In its final response before Noel took his complaint to the ombudsman in 2011, Irish Life reminded him that he was warned of a potential shortfall. “We regret that your plan has not performed as well as expected. However, we feel the documentation provided to you at the point of sale did clarify that our projections were not guaranteed.”


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## Sumatra (7 Mar 2013)

Just looking at Ombudsman’s statutory remit [57BX(3)(b) of the 2004 Act. Does anyone know what the rational was behind choosing 6 years? 

Please correct me if I am wrong but my understanding is although the endowment may have started say 20 years ago there is still an opportunity to bring a case to the Financial Ombudsman at maturity. 

If the Financial Ombudsman was given the power to name and shame, as well as rewarding institutions who are doing well with low complaints and identifying particularly bad ones it might free up more resourses spent on frivolous or vexatious complains that could allow them concentrate on subjects such as endowment mortgages which started many years ago and outside the present 6 year remit.


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## Brendan Burgess (7 Mar 2013)

Sumatra said:


> Please correct me if I am wrong but my understanding is although the endowment may have started say 20 years ago there is still an opportunity to bring a case to the Financial Ombudsman at maturity.
> 
> .



On what do you base this?  The legislation is very clear:



> Section 57 BX   (3) A consumer is not entitled to make a complaint if the conduct complained of—
> (_a_) ...
> (_b_) occurred more than 6 years before the complaint is made,



The conduct complained of is usually the mis-selling of the endowment which took place 20 years ago.

If they wrote to you two years ago about the upcoming maturity and that letter was misleading, then you could take a case to the Ombudsman on that issue.

I presume that it was set at 6 years to tie in with the time limit for action in civil cases under the Statute of Limitations.


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## Bronte (7 Mar 2013)

Niall Brady said:


> For example, the financial ombudsman service in Britain gives consumers three years from the time they become aware of potential mis-selling to make complaints.


 
This is an excellent campaign by the Sunday Times. Well done Niall Brady et al. 

I myself have a product that was misold and the Financial ombudsman could not rule on this aspect of it due to the 6 year rule. I did get compensation for their mishandling though. But you really have to feel sorry for those who were mis-sold endowments. This is serious money to be down. 

A customer being allowed to complain within 3 years of noticing the problem would help a lot of people and would help to concentrate the minds of bankers when they decide to introduce new products that they know to be dodgy. I'm fully convinced that they knew what they were doing particularly with endowments and with PPI insurance (pays out when you're out of work - supposedly).

In addition to the above campaign how about adding another, that if your bank has made an error that is detrimental to the bank, that they must write it off and not recoup from the customer who had done nothing wrong. As in the very recent scandal of ex First Active, now Ulster bank customers not being moved to capital and interest payments and therefore having massive arrears. If banks make mistakes, then because the banks have all the power, and money, and just because they should be more careful with how they deal with customers in general, that it is they who always lose out when they have been at fault. That would help put manners on them and my goodness they are seriously lacking in any customer service or care.


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## Sumatra (7 Mar 2013)

Hi Brendan, I'm in agreement with you. my understanding is the FSO can investigate (a) misselling at date of sale. I appreciate the date of sale may be outside the 6 year remit and the subject of this excellent campaign and (b) Shortfall in the final or projected outcome.  Ref Joe Meade's press release to the joint Oireachtas Committee on Finance and the Public Service on 18 Jan 2006.

Hi Bronte, if the FSO didn't have the 6 year rule do you think your settlement could have been higher?


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## Bronte (7 Mar 2013)

Sumatra said:


> Hi Bronte, if the FSO didn't have the 6 year rule do you think your settlement could have been higher?


 
Yes because *maybe* I would have received my premiums back. But my case is quite complicated that I don't want to get into but they argued I would still have been covered etc. Company involved only finally acknowledged the mis-selling in writing to me just before the Ombudsman made his ruling. But part of this ruling was that the could not look into the mis-selling aspect of it due to the 6 year rule. So I don't think it was fair that the full facts could not be looked at. If we had the change that the Sunday Times is proposing I would feel that it was a fairer system.


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## Sumatra (7 Mar 2013)

Thank you for your reply and I'm sorry to hear that Bronte.

In the UK they too have a 6 year rule but they do have a special rule on mortgage endowment complaints that gives them discretion to look at complaints that fall outside the 6 year time limit in exceptional circumstances. In their books an exceptional circumstances is something like incapacity so probably not designed for the majority.

I'm trying to find out the justification for our own 6 year rule but have been unable to. Reply from press office below but nothing new.


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## Sumatra (7 Mar 2013)

*DÁIL QUESTION*

To ask the Minister for Finance his plans to reform the statue of limitations so that claims can be made against financial institutions that mis-sold financial products.

- Clare Daly.​ 
*    For WRITTEN answer on Thursday, 21st February, 2013.

Ref No: 9309/13

*REPLY*​ 
*Minister for Finance ( Mr Noonan) :* 


I do not have the primary role in relation to amending the law on the “Statue of Limitations”.  This is a matter which has broader legal application and as such would fall for consideration for my colleague the Minister for Justice and Equality.




*DÁIL QUESTION*

To ask the Minister for Finance the reason the Financial Services Ombudsman was not in a position to investigate the case referred to him by a person (details supplied) in County Cork in view of the difficulty that had not arisen until the maturity date of the policy and that it was only at the date of maturity that the difficulty became known to the policy holder; and if he will make a statement on the matter.

- Jerry Buttimer.​*    For WRITTEN answer on Tuesday, 26th February, 2013.

*Ref No: 9941/13*

*REPLY*

*Minister for Finance ( Mr Noonan) :*

Firstly, I must point out that the Financial Services Ombudsman is independent in the performance of his statutory functions and it would not be appropriate for me to comment on his work.  

The Financial Services Ombudsman Bureau was established under the Central Bank and Financial Services Authority of Ireland Act 2004.  This legislation provides the Financial Services Ombudsman with various powers in order to determine jurisdiction on a complaint. Included in this is a statutory timeframe, Section 57BX (3)(b) provides:-

“A consumer is not entitled to make a complaint if the conduct complained of - occurred more than 6 years before the complaint is made.”

The legislation prohibits the Financial Services Ombudsman from examining any aspect of a complaint where the conduct being complained of occurred more than 6 years *from receipt* of the Complaint in his Office.  If the conduct being complained of occurred 6 year before the complaint is submitted to the Financial Services Ombudsman, the Ombudsman has no discretion in examining such a case”.


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## twofor1 (22 Mar 2013)

Brendan Burgess said:


> Anyone want to tell their story of how their claim was rejected because of the six year rule?



Although not a mis-selling complaint, this might be of interest to some;

In 2012 I became aware that unknown to me, charges were being deducted annually for over 10 years, from a pension fund I have with one of the main providers.

I followed the complaints procedure and my complaint eventually ended up with the Ombudsman, who rejected my complaint on the six year rule, pointing out that the legislation specifically states when the conduct complained of occurred and not when you became aware of the issue.

I resubmitted my complaint with some changes, I now stated that although the conduct complained of first occurred over ten years ago, this same conduct was repeated every year thereafter until 2012, but my complaint related only to the six year period up to November 2012.

This complaint was accepted and I have recently been informed by the Ombudsman that the investigation into my complaint will commence shortly.

If I win the case, the best I could expect is to be refunded for the six years, this would be far better than letting them away with it altogether.


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## Gerry Canning (4 Apr 2013)

brendan , I have a letter formulated on the {difference} twix Uk and Roi.
Can you send me your e-mail contact and I will attach it to you.

Thanks .


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## honest (1 May 2013)

Suppose a borrower took out a mortgage with a financial institution in 2005, and for years the financial institution has been refusing to answer questions on the mortgage application, valuation etc.   The ombudsman says ( well, said last year and in 2011 ) it cannot investigate actions over 6 years old.  The bank will not answer questions sent to it last year by registered post regarding the mortgage application , valuation etc.  
My question is : could the borrower claim that the bank should answer questions put to it last year? Ever though the questions concern events over 6 years old?


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## Brendan Burgess (3 May 2013)

Michael McGrath of Fianna Fáil has tabled the following Bill in the Dáil. They are waiting for a slot in Private Members' time to debate it.

     Section 57BX of the Central Bank and Financial Services Authority of Ireland Act

2004 Act is hereby amended by the substitution of sub-section (3) with the following sub-section:
_
  A  consumer  is  not  entitled  to  make  a  complaint  if  the  conduct complained of -a     is or has been the subject of legal proceedings before a Court or aTribunal, or   
b)   relates to a matter that is within the jurisdiction of the Pensions Ombudsman, or
c)        is of a class prescribed by Council Regulations, or_
*      occurred  more  than  three  years  from  the  date  on  which  the consumer first knew or in the circumstances ought reasonably to have known that the conduct of which complaint is made was attributable to the conduct of the Financial Service Provider.*


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## Brendan Burgess (27 Feb 2015)

Bump for admin purposes


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