Santander free forever bank account changes

Section62

GeoffTF said:

Section62 said:

A customer complains that they have been given notice that they will be charged for a service/that their charges will be increased/that their interest rate is being reduced/that their account is being closed, and you are saying FOS "can not" do anything with that complaint before the change is actually implemented?

IIRC you said that complaints about the changed T&Cs in 2015 were rejected because the FOS could only award compensation for customer losses that had already occurred, and not for potential losses in the future.

I think you might be recalling incorrectly.  I don't remember saying that, and don't think I would as it isn't correct.  If you can find the post where you think I said that I'll happily amend it if necessary.

You could possibly be getting mixed up with another discussion in the thread about what an appropriate level of compensation might be for the loss of an account which was promised to be free 'forever'.  I.e. whether 'forever' might be until someone's retirement age, or expected lifespan, or whether the possibility of the business being transferred to someone else needs to be taken into account as well.  In that case it wouldn't be that compensation couldn't be awarded for losses that hadn't already happened, but rather the difficulty in determining what was 'fair' (for both sides) where the promise made was 'forever'.

GeoffTF said:

It would appear that they cannot now rule on the changes in 2015 because of the 6 year timeout rule, and they can now only consider the current T&Cs.

We've discussed the time limits many times in the thread already.  I think you are incorrect in believing the changes in 2015 are out of time, because the six-year rule in DISP 2.8.2 (2)(a) is conditioned by ";or (if later) (b) three years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause for complaint".

Therefore if consumers were unaware Santander were going to break the free 'forever' promise and introduce charging, then they would have three years from when they "became aware (or ought reasonably to have become aware)" in order to make their complaint.  So probably some time in 2028.

FOS would need to examine the circumstances of the complaint to determine whether the complainant should have been aware (or ought reasonably to have been aware) about the charges in 2015, and also whether there has been anything since 2015 which should have had the effect of making the complainant aware.

However, since Santander appear to have processed people's complaints and issued them with a final response and reference number - rather than simply telling them their complaint is out of time - then it may be that Santander already expect FOS to apply the three year rule of DISP 2.8.2 (2)(b).

Section62

born_again said:

Section62 said:

...

born_again said:

They can not preempt a change that may not happen.

Again, what is the source for this?

A customer complains that they have been given notice that they will be charged for a service/that their charges will be increased/that their interest rate is being reduced/that their account is being closed, and you are saying FOS "can not" do anything with that complaint before the change is actually implemented?

If so, there must be something specific which says that, because it could considerably reduce the ability of FOS to ensure a fair outcome for the customer.  A restriction on FOS of that nature would surely have to be documented somewhere?

In effect yes. So long as they have the change covered in T/C.
I don't have any sources. Just my understanding of the process.

I disagree.  Not least because the terms and conditions themselves may be unfair.

born_again said:

FOS are there to police the banks & make sure they are following both FCA & banks own procedures. When a customer complains.

FOS are not there "to police the banks".  They are very clear about this if you ask them to do something which goes beyond their remit as an impartial dispute resolution service.

born_again said:

So if FOS ruled that the charge was not to be applied for whatever reason (No idea what they might use). Santander could simply pull the account under the T/C of account notice, as a business decision & FOS would be powerless to act. 
They can not force a bank to keep a account open.

A final decision made by a FOS ombudsman is legally binding on the financial business.  If a financial business attempted to circumvent the legally binding nature of the decision by closing the customer's account(s) then I'd expect FOS to take a very dim view of it.  I don't know, but I suspect the result would be a referral of the matter to the FCA for regulatory action to be taken against the business.  (Rule DISP 3.7.12)

I'd really hope the senior management at Santander wouldn't be so idiotic as to respond to an adverse FOS decision by closing the customer's account.... that could really make a bad situation much worse.

solidpro

amyfairweather said:

What are you on about?  We're on the same side and have been since day one.

Just some friendly fire. It happens!

GeoffTF

Section62 said:

We've discussed the time limits many times in the thread already.  I think you are incorrect in believing the changes in 2015 are out of time, because the six-year rule in DISP 2.8.2 (2)(a) is conditioned by ";or (if later) (b) three years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause for complaint".

Therefore if consumers were unaware Santander were going to break the free 'forever' promise and introduce charging, then they would have three years from when they "became aware (or ought reasonably to have become aware)" in order to make their complaint.  So probably some time in 2028.

FOS would need to examine the circumstances of the complaint to determine whether the complainant should have been aware (or ought reasonably to have been aware) about the charges in 2015, and also whether there has been anything since 2015 which should have had the effect of making the complainant aware.

However, since Santander appear to have processed people's complaints and issued them with a final response and reference number - rather than simply telling them their complaint is out of time - then it may be that Santander already expect FOS to apply the three year rule of DISP 2.8.2 (2)(b).

I expect Santander would say that it adequately informed the customers of the changes to the T&Cs in 2015, and that the 3 year time limit for complaining about those changes in DISP 2.8.2 (2)(b) ran out in 2018. The FOS does not appear to have the power to order the changes to be reversed. The FCA does have that power.

Customers are making complaints about the addition of monthly charges. AFAIK nobody has recently made a complaint restricted to the T&C changes in 2015.

Section62

GeoffTF said:

Section62 said:

We've discussed the time limits many times in the thread already.  I think you are incorrect in believing the changes in 2015 are out of time, because the six-year rule in DISP 2.8.2 (2)(a) is conditioned by ";or (if later) (b) three years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause for complaint".

Therefore if consumers were unaware Santander were going to break the free 'forever' promise and introduce charging, then they would have three years from when they "became aware (or ought reasonably to have become aware)" in order to make their complaint.  So probably some time in 2028.

FOS would need to examine the circumstances of the complaint to determine whether the complainant should have been aware (or ought reasonably to have been aware) about the charges in 2015, and also whether there has been anything since 2015 which should have had the effect of making the complainant aware.

However, since Santander appear to have processed people's complaints and issued them with a final response and reference number - rather than simply telling them their complaint is out of time - then it may be that Santander already expect FOS to apply the three year rule of DISP 2.8.2 (2)(b).

I expect Santander would say that it adequately informed the customers of the changes to the T&Cs in 2015, and that the 3 year time limit for complaining about those changes in DISP 2.8.2 (2)(b) ran out in 2018.

Maybe they will.  But it would be for an Ombudsman to decide whether or not it is correct.  Santander had the opportunity to respond to people's complaints on the grounds that they were out of time, but appear not to have done so.

GeoffTF said:

The FOS does not appear to have the power to order the changes to be reversed. The FCA does have that power.

What makes you think that?

An Ombudsman can direct a respondent to take such steps as the Ombudsman considers just and appropriate.  If an Ombudsman decides the imposition of charging is unfair then AFAIK they could direct that the charging is stopped and any charges already made are refunded.  If you have a source which contradicts that, please share.

GeoffTF said:

Customers are making complaints about the addition of monthly charges. AFAIK nobody has recently made a complaint restricted to the T&C changes in 2015.

I'm not sure of the relevance of that.  People are complaining about the imposition of charges now.  If Santander's 'defence' is that they are allowed to do so as a result of the 2015 changes then the Ombudsman has to consider the effect of the 2015 changes and whether these were 'fair', regardless of whether the complainant mentioned them or not.

GeoffTF

Section62 said:

GeoffTF said:

The FOS does not appear to have the power to order the changes to be reversed. The FCA does have that power.

What makes you think that?

As I understand it, the FOS is restricted to providing compensation for individual claims. That does not appear to give it the power to change the T&Cs. Here is an interesting FOS decision where AJ Bell greatly increased the charges on its SIPP, without allowing a free transfer out:

https://www.financial-ombudsman.org.uk/decision/DRN1820689.pdf

The FCA’s guidance said:

“Our interpretation of the Regulations and in particular the indicative terms of
schedule 2 is that terms which allow a firm to unilaterally vary the terms of its contract
are less likely to be unfair if:
(1) There is a valid reason which is specified in the contract; or
(2) For variations to interest rates or other charges, the term provides that the variation
will be for a “valid reason” (which is not specified in the contract) and the contract
provides for the firm to give the consumer notice at the earliest opportunity…and the
consumer is free to dissolve the contract immediately; or
(3) For a contract of indeterminate duration, the contract provides for the firm to give the
consumer reasonable notice in advance of making the change and the consumer is
free to dissolve the contract”.

In Mr C’s case I consider that there was a valid reason which is specified in the contract – so (1) above applied.

(3) above would appear to apply in the "free forever" case, and possibly (1) and (2) too. Nonetheless, I know nothing more than I have picked up with a few Google searches. I would, however, be surprised if Santander had gone in for this without an expectation of winning.

eskbanker

Section62 said:

GeoffTF said:

The FOS does not appear to have the power to order the changes to be reversed. The FCA does have that power.

What makes you think that?

An Ombudsman can direct a respondent to take such steps as the Ombudsman considers just and appropriate.  If an Ombudsman decides the imposition of charging is unfair then AFAIK they could direct that the charging is stopped and any charges already made are refunded.  If you have a source which contradicts that, please share.

You omitted some words which I believe to be key within FSMA 229.2(b):

a direction that the respondent take such steps in relation to the complainant as the ombudsman considers just and appropriate (whether or not a court could order those steps to be taken)

https://www.legislation.gov.uk/ukpga/2000/8/section/229

so I'd interpret that (within the context of FOS handling individual complaints) as restricting the FOS scope to dealing with resolving matters for an individual complainant rather than having the authority to direct a respondent to change its policy for everyone, which I understand to be for the FCA to decide.

I'm not 100% on this though, so happy to be convinced otherwise!

Section62

GeoffTF said:

Section62 said:

GeoffTF said:

The FOS does not appear to have the power to order the changes to be reversed. The FCA does have that power.

What makes you think that?

As I understand it, the FOS is restricted to providing compensation for individual claims. That does not appear to give it the power to change the T&Cs.

According to the FCA handbook (DISP 3.7.1), the Ombudsman's determination may include one or more of the following:

(1) a money award against the respondent; or
(2) an interest award against the respondent; or
(3) a costs award against the respondent; or
(4) a direction to the respondent.

So the Ombudsman's powers are more extensive than simply providing compensation.  The full scope of what a 'direction' might involve isn't clear, however the handbook (DISP 3.7.11) states -
"a direction may require the respondent to take such steps in relation to the complainant as the Ombudsman considers just and appropriate (whether or not a court could order those steps to be taken)."

On the face of it, "whether or not a court could order those steps to be taken" suggests the Ombudsman potentially has greater freedom than a court in terms of directing the respondent - and since a court could clearly strike out a term of a contract, or impose an interpretation of a term, it seems that an Ombudsman could indeed direct a respondent to alter the T&C's if they considered 'just and appropriate' to do so.  (an Ombudsman's decision is subject to judicial review, so remains subordinate to the courts, thus giving the respondent a route of appeal and/or to test whether the direction is lawful)

Also, as you've noted, the FCA does have the power to order the changes to be reversed. So if it was the case that it would be ultra vires for an Ombudsman to direct that Santander do not impose charges on a 'free forever' account then it remains an option for FOS to report their findings to the FCA for them to take the necessary action.

Either way, the outcome of a complaint to FOS is not restricted to providing compensation only.

Section62

eskbanker said:

Section62 said:

GeoffTF said:

The FOS does not appear to have the power to order the changes to be reversed. The FCA does have that power.

What makes you think that?

An Ombudsman can direct a respondent to take such steps as the Ombudsman considers just and appropriate.  If an Ombudsman decides the imposition of charging is unfair then AFAIK they could direct that the charging is stopped and any charges already made are refunded.  If you have a source which contradicts that, please share.

You omitted some words which I believe to be key within FSMA 229.2(b):

a direction that the respondent take such steps in relation to the complainant as the ombudsman considers just and appropriate (whether or not a court could order those steps to be taken)

https://www.legislation.gov.uk/ukpga/2000/8/section/229

so I'd interpret that (within the context of FOS handling individual complaints) as restricting the FOS scope to dealing with resolving matters for an individual complainant rather than having the authority to direct a respondent to change its policy for everyone, which I understand to be for the FCA to decide.

I'm not 100% on this though, so happy to be convinced otherwise!

I agree, though it remains open for all (or as many who can be bothered) of the affected customers to make the same complaint and achieve the same outcome.  I assume that at some point the respondent might sensibly opt to apply the action to all, rather than incur the costs of making each affected customer go through the FOS complaints process.

GeoffTF

Section62 said:

GeoffTF said:

Section62 said:

GeoffTF said:

The FOS does not appear to have the power to order the changes to be reversed. The FCA does have that power.

What makes you think that?

As I understand it, the FOS is restricted to providing compensation for individual claims. That does not appear to give it the power to change the T&Cs.

According to the FCA handbook (DISP 3.7.1), the Ombudsman's determination may include one or more of the following:

(1) a money award against the respondent; or
(2) an interest award against the respondent; or
(3) a costs award against the respondent; or
(4) a direction to the respondent.

So the Ombudsman's powers are more extensive than simply providing compensation.  The full scope of what a 'direction' might involve isn't clear, however the handbook (DISP 3.7.11) states -
"a direction may require the respondent to take such steps in relation to the complainant as the Ombudsman considers just and appropriate (whether or not a court could order those steps to be taken)."

On the face of it, "whether or not a court could order those steps to be taken" suggests the Ombudsman potentially has greater freedom than a court in terms of directing the respondent - and since a court could clearly strike out a term of a contract, or impose an interpretation of a term, it seems that an Ombudsman could indeed direct a respondent to alter the T&C's if they considered 'just and appropriate' to do so.  (an Ombudsman's decision is subject to judicial review, so remains subordinate to the courts, thus giving the respondent a route of appeal and/or to test whether the direction is lawful)

Also, as you've noted, the FCA does have the power to order the changes to be reversed. So if it was the case that it would be ultra vires for an Ombudsman to direct that Santander do not impose charges on a 'free forever' account then it remains an option for FOS to report their findings to the FCA for them to take the necessary action.

Either way, the outcome of a complaint to FOS is not restricted to providing compensation only.

"Redress" would have been a better word than compensation. Nonetheless, my understanding concurs with that expressed by eskbanker. In the AJ Bell case, the FCA adjudicated on the T&Cs, and the Ombudsman made his decision for an individual claimant on the basis of the FCA guidance.

An important issue is whether the FCA considers the current T&Cs to be acceptable. Santander may have already consulted with the FCA on that matter, as seems to have happened with AJ Bell.