Landmark Court Decisions Regarding The Financial Services Ombudsman

With the Financial Services Ombudsman (FSO) reporting a high level of complaints to his office in 2011, he has also been active in the courts, with a number of recent landmark rulings taking place.

In Lyons v FSO1 the High Court held that the FSO's decision to proceed without an oral hearing was an error in law and had negated the appellants' (Lyons) constitutional rights to fair procedures. The Court held that without an oral hearing, the appellants could not have realistically hoped to establish the underlying merits of their case.

This ruling will have a significant impact on the FSO's deliberations as to whether or not complaints should proceed to oral hearing. This in turn, as the Court acknowledged, will have significant cost and resource implications for the FSO in current times of austerity.

The Court also observed, by reference to the relevant legislation, that the nature of complaints now dealt with by FSO was such that it is now difficult, if not impossible, to distinguish between complaints to the FSO and commercial litigation involving banks and non-corporate customers. The Court suggested that an uncomfortable consequence of this is that a bank customer who had defaulted on his loan agreement may potentially fend off significant commercial litigation by initiating a complaint to the FSO. The Court suggested that a review of the proper scope and role of the FSO vis-à-vis the Court system was required.

Although not involving a direct appeal of an FSO decision, another related case of note is O'Hara v. ACC Bank2. Here, the plaintiff attempted to bring separate High Court proceedings following the prior determination of his complaint by the FSO.

In this instance, the High Court prevented the plaintiff from taking another bite of the cherry, holding that the...