Dispute resolution once debt recovery legal proceedings have started

The Financial Ombudsman Service has published an Operational Guideline discussing its prohibition on the pursuit of legal proceedings related to debt recovery instituted prior to the lodging of a dispute with FOS.

In FOS’s opinion, “upon receiving notification of the Dispute, the Financial Services Provider should have a process in place which ensures that no further steps are taken as soon as possible (with time being of the essence)….

As the critical date is the date of lodgement of the Dispute with FOS, any judgment obtained after that date must be set aside by the FSP at no cost to the Applicant. Within 14 days of the referral of the Dispute, the FSP must apply to set aside the judgment.”

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