R (Heather Moor & Edgecomb Limited) v (1) Financial Ombudsman Service (2) Simon Lodge

Charles Flint QC acted for the Financial Ombudsman Service in its defence of a Judicial Review of its decision to uphold a complaint against an independent financial advisor. The Court of Appeal has decided the important issue of whether under the Financial Services and Markets Act 2000 the Financial Ombudsman Service is required to determine a complaint in accordance with the common law. The effect of the decision will be to curtail the scope for judicial review of the FOS. 

The claimant had submitted that under the terms of FSMA 2000 s.228 the Financial Ombudsman Service was required to determine complaints in accordance with the rules of English law and that this was required in order to avoid infringing the claimant’s article 6 right under the ECHR to a fair trail. The claimant argued that the Ombudsman had failed to do so. He also argued that the Ombudsman should have held an oral hearing in public, and should have given his decision in public.

The Court held that the FSMA 2000 scheme did not require the ombudsman to determine a complaint in accordance with the common law; he was entitled to decide ‘by reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case’ (s.228). If the ombudsman’s opinion as to what was fair and reasonable was perverse or irrational, it was liable to be set aside on conventional judicial review grounds.

The Court also held that the scheme satisfied the requirements of Article 6 of the ECHR. The rules applied by the ombudsman were sufficiently predictable and arbitrariness on the part of the ombudsman, including an unreasoned and unjustified failure to treat like cases alike, would be a ground for judicial review.

Where a complaint could fairly be determined on written evidence and without oral submissions, given the nature of the jurisdiction and the desirability of speedy decisions at minimum cost and with minimum formality, it was normally not necessary for the ombudsman to hold a public hearing. The ombudsman's decision had been made public in the judicial review proceedings and the availability of such proceedings meant that there was no breach of art.6.