The saying goes that time and tide wait for no man.
The same is true of the Limitation Act 1980.
Liability is not an open-ended concept - even the worst of wrongdoers will be protected by the passage of time.
Time limits apply to all avenues for redress, and are subject to deadlines within which claims or complaints must be made.
This means that knowing what steps must be taken, and by when, is key to protecting a claim or defending an action.
It's beyond the scope of this article to outline all the time limits for all legal actions. Entire tomes are dedicated to this thorny subject.
Claims which are proved to have been brought beyond these time limits can offer a full defence, and case law varies as to how the legislation should be interpreted in a range of scenarios.
So I'm going to limit my comments here to the two most popular claims made within the context of financial advice: breach of statutory duty and negligence.
These claims may be brought either through the courts or through the Financial Ombudsman Service (FOS).
Breach of statutory duty
This has by far the most straightforward deadline.
In short, breach of statutory duty is a breach of FCA rules, and the right to damages for such a breach is enshrined in the Financial Services and Markets Act 2000 (as amended, section 138D for those of you who are on the detail).
Such claims must be issued at court within six years of the date of the damage.
For ease this is generally the date the investment was made: full stop, end of story, do not pass go, do not collect £200 (though it's also worth bearing in mind the points made at the end of this article).
For the claim to be in time, the claimant needs to obtain a court seal on an N251 claim form after paying the court fee.
A day’s delay will provide the defendant with a complete defence, even where the very worst breach occurred.
It's not enough for the would-be claimant to bring their complaint to the attention of the would-be defendant.
The claimant’s ability to have discovered the breach in advance of the six-year deadline is irrelevant, as is their state of health, age, ability to understand and sophistication.
The court has no discretion to extend the deadline, but will only take it into account if raised as a defence by the defendant.
A claim for negligence has the same limitation period of six years from the date of damage.
Again, in the context of advice, this will generally be the date the investment was made.
But this time limit can be extended where the claimant did not know
“...such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment."
In other words, the claimant must know the essence of the acts or omissions to which his damage is attributable.
In those circumstances, the claimant has three years from the date of knowledge to issue proceedings. They must do so within 15 years of the date of the damage in any event.
It's easy to imagine a scenario where a client is advised to make an investment or transfer out of a pension, for example, and wouldn't know that he or she was in a worse position than they should have been as a result.
Things get more complicated when the question arises as to what the claimant ought to have known and when it might have been reasonable for them to seek the advice of a professional.
Suffice to say, the earlier advice is sought, the better.
To clear up a widespread myth, there is no special category of court time limits for negligent advice relating to pensions.
This misunderstanding may relate to the regulator's requirement for you to keep a client’s file indefinitely where it relates to a pension transfer. That requirement is not connected to the Limitation Act.
The time limit to bring claims to court for negligent pension transfer advice remains six years. It can only be extended where the client did not have the requisite knowledge.
What's different with the FOS
The FCA’s dispute resolution (DISP) rules govern who can use the FOS’s complaints procedure and what time limits apply.
The time limits largely reflect the Limitation Act, but with subtle differences which are worth exploring.
DISP 2.8.1 R states that the FOS cannot consider a complaint:
1) that was brought to it after six months of the firm sending the complainant their final response or redress determination (issued under a consumer redress scheme); or
2) if it was received over six years after the event happened, or three years after the complainant became aware or should have reasonably been aware they had a complaint to raise.
These conditions apply unless the complainant referred the complaint to the firm or to the FOS within that period, and has a written acknowledgement or some other record of the complaint having been received.
The only way around these time limits is if the FOS considers that the failure to meet the time limit was as a result of exceptional circumstances, or if the defendant firm consents.
An example of exceptional circumstances might be where the complainant has been or is incapacitated.
Things to bear in mind
These time limits are crucial when considering complaints because they will only be effective if you raise them.
The court will consider a claim made out of time unless you raise the defence that too much time has passed.
The FOS may not automatically reject a claim because it is made out of time. It is imperative that, if you receive a complaint which falls outside the statutory time limits, you use this when responding to the complaint.
It's also worth pointing out that time limits are different where there has been a fraud or a deliberate concealment of the negligence.