The High Court has ruled that the Financial Services and Pensions Ombudsman (FSPO) unlawfully rejected one part of a couple’s request to extend the time for a mortgage complaint, because it did not engage with their argument that their family home was at risk. The court upheld the FSPO’s separate finding that they ought reasonably to have been aware of the complained-of conduct by 2011.
Joseph and Ann Baynes sought judicial review of the FSPO’s decision not to investigate their complaint about the 2007 sale of a €150,000 mortgage by IIB Home Loans, a KBC Bank subsidiary. They alleged the loan was unsuitable and that the bank had failed to assess their ability to repay it. Those allegations were not determined in the judicial review.
The loan was intended to fund a deposit on an investment property in Portugal. The purchase fell through and the deposit was forfeited. The Baynes’ Dublin home secured the loan. After the interest-only period ended, they encountered repayment difficulties and consulted the Money Advice and Budgeting Service in 2011. They later agreed restructuring arrangements with KBC. Their adviser said they only recognised the alleged mis-selling after receiving advice in late 2019.
The couple complained to KBC in April 2020 and to the FSPO in June. The FSPO decided in August 2021 that the complaint was out of time. Under the statutory rules for long-term financial services, the complaint could be made within six years of the conduct, within three years of when the complainants became aware or ought to have become aware of it, or within a longer period allowed by the FSPO on reasonable grounds where an extension would be just and equitable.
Mr Justice Cian Ferriter found that the FSPO had lawfully concluded the Baynes ought to have recognised the loan’s suitability and repayment-capacity issues by 2011, when the investment had failed and they were struggling to meet repayments. The court said there was evidence before the FSPO about their financial difficulties and the possibility of selling their home. It found no basis to set aside the FSPO’s decision on that time-limit test.
But the court found the FSPO had not meaningfully addressed the separate request for an extension on just and equitable grounds. The couple had argued that, by 2019, the bank was seeking repayment in full and their home was at risk. The judge said that argument, supported by evidence, needed at least to be considered and answered with some reasoning. The FSPO’s statement that there was “no evidence” of grounds for an extension did not show that it had done so.
The court concluded that the FSPO’s decision was lawful under the awareness test but unlawful under the separate extension provision. It did not decide whether an extension should be granted or whether the mortgage had been mis-sold. The judgment said the appropriate form of order would be discussed with counsel; it did not specify a final order in the judgment.