Definition of a 'Long-Term Financial Service'?

Where a question arises as to whether the complaint has been made to the FSPO within the time limits set out by the Financial Services and Pension Ombudsman Act 2017, as amended (the "FSPO Act"), the FSPO will consider whether the complaint relates to a long-term financial service. There is an alternative time limit for a complaint about a long-term financial service.

The definition of a "long-term financial service" is set out in full in Section 2 of the FSPO Act.

A long-term financial service is as follows:

  1. A financial service the duration of which is a fixed term of 5 years and one month or more
    • When looking at whether a financial service has a term of 5 years and one month or more, it is not possible to combine periods of time if the financial service has been in place for a series of consecutive shorter terms, that might ultimately be more than 5 years. By way of example:
      • An annual insurance policy purchased in January 2012, is renewed in January 2013, and every year thereafter until 2019. This is not a long-term financial service. Instead, it is a series of one-year contracts, which followed each other.
      • A three-year loan entered into in May 2015, is not fully repaid as agreed by May 2018, and instead, it continues to have an outstanding balance until December 2021. This is not a long-term financial service, as the contractual term agreed was a three-year period.
    • Where a financial service does not fix its duration to be of a term of 5 years and one month or more, a financial service shall be regarded as a long-term financial service, if it would be reasonable for a consumer to expect its duration to be at least 5 years and one month or more. That reasonable expectation must arise from –
      1. the manner in which the financial service works to supply a financial benefit to the consumer
      2. the type of assets connected to its operation, or
      3. representations made by the financial service provider
      A reasonable expectation cannot arise in relation to:
      • a current account with a financial institution, or
      • any other financial service of an indefinite duration that is widely available and does not have specialised characteristics, for example, a credit card account.
  2. Life Assurance
    Certain life assurance is set out in the definition of a long-term financial service in the FSPO Act. There is no requirement for that life assurance to be of any particular fixed term.