Regulation  

Fos accused of U-turn on time-barring

Fos accused of U-turn on time-barring

The Financial Ombudsman Service has been accused of backtracking on its stance not to time bar hundreds of complaints involving an unregulated overseas property scheme.

Between 2003 and 2008, Ocean View Properties sold off-plan apartments in Spain to British clients for around £70,000 per unit, and many investors were advised to remortgage their existing properties to release equity for the deposit.

However, it was later discovered the developments had never been built because the company did not have planning permission or the relevant permits for the land.

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The High Court ordered Ocean View Properties, which was registered in Staffordshire, to be wound up in 2009 as liquidators tried to recoup investors’ cash.

The Claims Bureau has since helped more than 650 Ocean View investors lodge complaints with the Fos against financial advisers who recommended that clients invest in the property scam.

However, Ben Parslow, the operations director at the Claims Bureau, said early Fos decisions had been “contradictory” so his team met with the ombudsman in January 2015 to discuss the issue.

According to Mr Parslow, the meeting focused on the time limitations of these cases, and it was agreed they could be considered by the Fos if it had been less than three years since a client had been made aware they could complain to the Fos about the financial advice.

Despite liquidators writing to Ocean View investors to say the company had no funds to repay clients, he said the Fos had agreed that no event had occurred in the prior three years to give clients reason to believe the financial adviser could be liable for the loss.

In an online forum, which contains 760 posts dating as far back as 2008, many Ocean View victims seemed unsure of where to turn.

In August 2012, one forum member posted: “It would appear that most investors in the UK have given up the fight. Don't give up in fighting for what has been stolen from you.” 

In 2013, Court of Appeal judges ordered the Financial Services Compensation Scheme to compensate a client who had lost her home after being given “bad advice” to invest in Ocean View properties, which spurred other investors to realise they could have a case against their adviser.

Last summer, the Fos issued provisional decisions on Ocean View cases which made it clear the complaints were not “out of time”.

In one decision dated 1 June 2015, the adjudicator said: “I don’t believe the fact that the investment failed meant that the consumers would have, or ought to have known, that they had cause to complain about the mortgage advice they received.” 

However, Mr Parslow said several months passed where the Fos failed to respond to the firm’s queries and no progress was made on these provisional decisions.

In March this year, the claims management firm received around 25 final decisions from the Fos, most of which were reversals of previously upheld decisions.