Agreeing to treat FOS decisions as binding

Agreeing to treat FOS decisions as binding


Author: Paula Swain

Applies to: UK wide


This article looks at the case of Templars Estates Ltd and others v National Westminster Bank Plc and Royal Bank of Scotland, 2016.

The High Court was recently asked to decide whether a court case should be stayed while the Financial Ombudsman Service (FOS) dealt with a complaint. The Court's decision raises some interesting talking points around negotiation with complainants, and the operation of standstill agreements generally in litigation.

The claimants in this case raised allegations that the banks had given negligent advice. The pre-litigation phase of this case seems to have dragged on for many years, so much so, that standstill agreements were entered into by the parties. A standstill agreement is normally used where a limitation period is due to expire and the parties agree that the limitation period will be extended for a period of time. It gives the parties breathing space to investigate and to try to resolve disputes without litigation. The parties in this case appear to have put off a court case for a number of years.

In the end, the complaints were not resolved, and the standstill agreements were not extended. The claimants therefore started court proceedings to protect their position and to avoid being statute barred from bringing their claims in the court. However, their preference was to refer their complaint to FOS, and so they asked the banks to consent to a stay of the court proceedings while they made that referral to FOS. The claimants wanted to use FOS as they felt that it would be more cost effective and proportionate than taking the case to a trial in the High Court.

The banks did not agree to the stay, and so the claimants had to apply to the court for a stay to be imposed while FOS dealt with the complaints. The banks argued that the claim had become stale and they would be prejudiced due to the passage of time. We all know the difficulties of the passage of time when it comes to memories, particularly when cross examination is deployed at trial for example.

The banks also argued that any decision by FOS would not be binding on the claimants, and that the case might still need to be tried in the High Court if the claimants did not accept the decision made by FOS. This would delay the case even further. There would also be further delay in that the FOS complaint process could take a long time.

Following - it seems - an offer from the banks, the claimants agreed that if they did obtain an award from the FOS, they would not return to the High Court. They agreed that they would enforce that award, so far as it was made up to £150,000, and take their chances as to whether the banks would be prepared to comply with a direction of FOS which would lead to the banks putting their hands in their pocket to a greater extent, or reconstituting the investment to an extent which might amount to more than £150,000.


'On the basis that the claimants undertake that in the event they obtain an award from the FOS, they will not return to the High Court, and will discontinue the proceedings in respect of issues three and four, I grant the stay requested.'


This is truly a thought provoking judgment for those authorised and dealing with complaints. It raises the question about the scope for reaching agreement with a complainant that they will accept the decision of FOS as a full and final outcome for the case and the complaint before the complaint is lodged with FOS.

In some cases, it might be far more beneficial for both parties to refer the case to FOS and to know that the outcome will bind both parties. This is not just a relevant question during the complaint process, but one that could be a live consideration during or before court proceedings.

As to standstill agreements, the court indicated that by entering into standstill agreements the banks had accepted delays, and could not then raise arguments about delay after expiry of those agreements. The banks must have accepted by entering into the agreements that the case would become older and older with time. When drafting standstill agreements, it may be worthwhile considering and drafting for life after the standstill, and what drafting could help in any future litigation to come.


This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.