FINANCIAL SERVICES OMBUDSMAN – AN UPDATE
Our Winter 2011 Newsletter included an article concerning two recent decisions of the High Court endorsing the decisions taken by the Financial Services Ombudsman (“the Ombudsman”) in relation to complaints brought by consumers concerning particular financial service providers.
Two further decisions have very recently been handed down in the High Court in relation to appeals brought against decisions of the Ombudsman. These decisions are important additions to the body of case-law expanding upon the statutory parameters within which the Ombudsman operates.
The first judgment is that of Judge Cross in Hyde v Financial Services Ombudsman [2011] IEHC 422. In that case the dispute arose following the agreement between a bank and Ms Hyde for a loan facility in relation to the purchase and renovation of property. Several aspects of the loan were disputed by the parties including the extent of the facility, the responsibility to begin repayments and the terms and conditions of the loan facility.
In dealing with the complaint, the Ombudsman elected not to hold an oral hearing and instead dealt with the matter by reference to the written submissions and documents put before him. In keeping with established case-law, Judge Cross found that the question of whether or not an oral hearing should take place, where a complaint is made to the Ombudsman, is a matter of broad discretion for the Ombudsman. However, Judge Cross was concerned that the lack of an oral hearing in the particular circumstances was a serious and significant error on the part of the Ombudsman such as to render the procedure unfair to Ms Hyde. Judge Cross found that the substance of the arguments made by Ms Hyde was that the Bank had made certain oral representations to her from which it had subsequently resiled. Therefore, in those circumstances, the Ombudsman should have held an oral hearing to properly test witness’s credibility and in order to fairly determine the matter. The failure to hold an oral hearing was found to be a serious and significant error on the part of the Ombudsman and Judge Cross quashed the Ombudsman’s decision and remitted the matter back to the Ombudsman for further consideration.
The second decision is that of Judge Charleton in O’Hara & Anor v ACC Bank PLC [2011] IEHC 367. That case concerned significant six figure investments by individuals in the ACC Bank “Solid World Bond”. ACC asked the court to determine whether Mr O’Hara could bring his case before the court in circumstances where ACC believed the same issues had already been determined by the Ombudsman on foot of a complaint by Mr O’Hara. The Ombudsman had found in favour of ACC and found no evidence that the products in question were mis-sold or that there was misrepresentation in respect of the nature of the products. Judge Charleton examined closely the limited nature of an the appeal mechanism to the High Court from a decision of the Ombudsman. He pointed out that the Central Bank and Financial Services Authority Act, 2004 specifically provided that a consumer is not entitled to make a complaint to the Ombudsman if the conduct complained of is, or has been, the subject of legal proceedings. He described ACC’s argument as boiling down to the fundamental proposition that once a complaint process with the Ombudsman is initiated, the complainant is thereafter locked out of any legal remedy before the courts on the same subject matter.
Judge Charleton found favour with ACC’s argument. He found that the legal principle of “issue estoppel” not only embraces issues previously tried by the Ombudsman but also issues which could and should have been included for adjudication by the Ombudsman. Judge Charleton went on to find that there were no special circumstances in this case which would cause him to depart from that legal principle prohibiting the hearing of the same complaint twice. He effectively concluded that Mr O’Hara, having made his complaint to the Ombudsman, could not take a second bite of the cherry by trying to re-litigate the same issues in the Courts.
This latter case is of importance to all considering making a complaint in respect of a financial service provider to the Ombudsman. It clearly provides that, once you go down that route, you are likely to be tied to the Ombudsman’s decision save in circumstances where the Ombudsman makes a serious and significant error or a series of errors in arriving at his decision.
Matthew Austin