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David Clark v. Argyle Consulting Limited [2010] CSOH 154


The pursuer became a client of the defenders in July 2000. The defenders were a firm of independent financial advisers. At the time of engaging the defenders' services, the pursuer sought to review his pension provision. After the pursuer's investments were not as successful as was originally hoped, the pursuer submitted the defenders had been negligent in a number of respects. On 8 October 2003, the pursuer made a complaint to the Financial Ombudsman, who upheld part of the pursuer's complaint in September 2005, however one part of the complaint was rejected. The Ombudsman required the pursuer to notify him before 26 October 2005 whether he accepted the final decision, however the pursuer failed to do so and the decision was not made binding upon the defenders.

Three years later, the current action was raised, where the pursuer sought a total of £81,973 by way of compensation for his alleged loss, with his claim founded on grounds of breach of contract, delict and breach of statutory duty.

The defenders submitted that any claim the pursuer had was now prescribed, as the action had been raised more than five years after the cause of action arose. While the pursuer accepted this fact, the pursuer submitted that the prescriptive period was interrupted as his reference to the Financial Ombudsman constituted an “arbitration”. It was therefore submitted that it was a “relevant claim” for the purposes of section 6 of the Prescription and Limitation (Scotland) Act 1973.

The court noted that while there are similarities between references to the Financial Ombudsman and other schemes of arbitration, there were important differences. For example, the court noted that the Financial Ombudsman is not required to determine a complaint in accordance with the common law. Moreover, at arbitration both parties would be bound by the final decision, whereas the decision of the Ombudsman required the acceptance of the party who referred the dispute. The court found that these were material distinctions and the court was therefore unable to conclude that referring a dispute to the Financial Ombudsman was a form of arbitration. The court found that the pursuer had not made a relevant claim and that therefore his claim had prescribed.