The High Court has refused Edward Stowe and Lisa Stowe Millar’s appeal against a Financial Services Ombudsman decision concerning their EBS mortgages, finding that the alleged misrepresentation at the heart of their complaint fell outside the statutory six-year time limit.
The couple asked the court to set aside the Ombudsman’s February 2014 decision not to uphold their complaint against EBS Limited. They said they had been led to believe that the variable rates on their home loan and a later top-up loan would track European Central Bank rates.
Their home loan was fixed at 4.85% for five years from 2006. The signed loan offer said the rate would then revert to EBS’s variable base rate, which was stated as 4.25% at the time. A 2007 offer for the top-up loan said EBS could increase or decrease its interest rate at its discretion.
The Stowes alleged that Sutton branch manager Mr Manuel had explained “standard variable rate” as a rate that moved in line with ECB changes. They said EBS’s April 2010 letter, advising that it would no longer adjust variable rates in line with ECB movements, showed that their understanding was wrong. They also complained about later increases to the home loan rate after its fixed period ended in 2011.
The Ombudsman received their complaint form at the end of July 2013. Under the Central Bank Act 1942, a consumer could not complain about conduct that occurred more than six years before making the complaint. The Ombudsman therefore excluded the alleged advice given in 2006. The Stowes argued that this advice was evidence of a later breach, rather than the conduct complained of, and said the Ombudsman should have held an oral hearing to address a conflict with the written loan documents.
Justice Michael Twomey found that the alleged representation was itself the conduct complained of: the couple’s May 2013 letter to EBS described the issue as the “mis-selling” of their mortgage. Since the alleged statement could only have been made by 12 September 2006, the complaint to the Ombudsman came too late for it to be considered. The court rejected the argument that the representation could instead be treated as evidence or an oral term of the mortgage agreement, saying that approach would circumvent the six-year limit.
The court held that the Ombudsman had made no serious and significant error warranting the decision being set aside. Because the alleged representation was outside the time limit, the court also rejected the related challenge to the decision not to hold an oral hearing. The requested relief was refused. The court did not determine whether the alleged representation was made or whether EBS breached the mortgage agreements.