Idealing.com Ltd v Financial Ombudsman Service Ltd
| Jurisdiction | England & Wales |
| Judge | Siddique |
| Judgment Date | 19 April 2024 |
| Neutral Citation | [2024] EWHC 847 (Admin) |
| Court | King's Bench Division (Administrative Court) |
| Docket Number | Case No: AC-2022-LON-003486 |
The King (on the application of)
[2024] EWHC 847 (Admin)
His Honour Judge Siddique sitting as a Deputy High Court Judge
Case No: AC-2022-LON-003486
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Oliver Assersohn (instructed by Pinsent Masons LLP) for the Claimant
James Strachan KC (instructed by The Financial Ombudsman Service Ltd) for the Defendant
Hearing dates: 5 and 6 March 2024
Approved Judgment
This judgment was handed down remotely at 10.00am on Friday 19 th April 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
His Honour Judge Siddique sitting as a Deputy High Court Judge:
Introduction
This case concerns the challenge to the lawfulness of three related decisions of the defendant, the Financial Ombudsman Service, following service complaints submitted by the claimant iDealing.com Ltd, a securities brokerage, via their solicitors Pinsent Masons LLP, on 18 January and 11 July 2022. The majority of the complaints were upheld leading to the decisions under challenge offering compensation of £500, later increased to £750.
The complaints related to the defendant's poor handling of an earlier consumer complaint against the claimant and another, namely Suffolk Life Pensions Ltd (the ‘consumer complaint’). Amongst other things the claimant complained that the defendant “wrongly threatened” to bring a complaint against the claimant on behalf of the consumer, Mr Henrick, encouraged Mr Henrick to make such a complaint and “doggedly and unreasonably” maintained that the defendant had jurisdiction to deal with the complaint (the ‘service complaint’). By way of redress, the claimant requested payment of their legal costs in the sum of £74,864.52 plus VAT. That request was refused leading to the claimant's pre-action protocol letter on 10 November 2022, with the claim for judicial review issued on 5 December 2022.
Following the order of Lang J on 3 November 2023, a rolled up hearing was held over two days on 5 and 6 March 2024, when the issue of amenability to judicial review also fell to be determined.
The decisions under challenge
The defendant's impugned decisions are as follows:
(1) the decision of the Ombudsman Manager, Mr Gary Lane, dated 19 August 2022, which offered the claimant compensation of £500 “for any inconvenience” (but which did not offer compensation in respect of legal fees) (“decision 1”);
(2) the decision of the Independent Assessor (“IA”), Dame Gillian Guy, dated 6 October 2022 recommending that the defendant pay £750 where its level of service had fallen “well below a reasonable level” for “the amount of unnecessary effort…needed to expend with the Service” (“decision 2”); and
(3) the decision of Ms Abby Thomas, Chief Ombudsman, dated 23 December 2022, accepting the IA's recommendation without apparently considering whether it was correct (“decision 3”).
Decision 3 was originally particularised as the decision of Mr Charlie Sweeney, Lead Ombudsman and Director of Casework, dated 17 October 2022, which had “noted” the IA's recommendation. However, following the service of Ms Abby Thomas' email on 8 December 2023, the claimant no longer seeks to challenge the acceptance of the IA's recommendation based on Mr Sweeney's involvement. Instead, the claimant now seeks to challenge the acceptance of the IA's recommendation on the basis of Ms Thomas' email of 23 December 2022. No objection was taken by Mr Strachan KC for the defendant. I am satisfied that it is possible to fairly deal with the challenge to this later decision and therefore grant leave to amend as necessary.
Mr Strachan KC did object to the introduction of two new lines of argument. First, in respect of whether the claimant's legal costs should have been paid as compensation for “distress or inconvenience” (and not just “damage”), in accordance with the defendant's non-statutory service complaint scheme. Second, whether there was procedural unfairness from an apparent failure to take account of the defendant's guidance on its non-statutory service complaint scheme and from relevant material having been withheld.
In R (Dolan) v Secretary of State for Health and Social Care [2020] EWCA Civ 1605; [2021] 1 WLR 2326, Lord Burnett CJ re-emphasised the need for procedural rigor in proceedings for judicial review where arguments have not been pleaded. In respect of whether the claimant's legal costs should have been paid as compensation for “distress or inconvenience”, ultimately the claimant did not pursue this new line of argument. In respect of the procedural unfairness arguments, as the claimant did not seek leave to amend, I am not required to consider the matter further.
The grounds for judicial review
The claimant submits that the decisions are unlawful on the following five grounds:
(1) Decision 1 involved the application of unpublished guidance.
(2) Decisions 2 and 3 failed to apply the IA's Terms of Reference.
(3) Decisions 2 and 3 involved a fetter of the exercise of discretion.
(4) Decisions 2 and 3 were procedurally unfair.
(5) The decisions were Wednesbury unreasonable.
Amenability to judicial review
By way of a preliminary matter the issue of amenability to judicial review must first be determined. It was common ground between the parties that the correct legal test to the question of amenability was summarised by Dyson LJ in R (Beer) v Hampshire Farmers' Market Ltd [2003] EWCA Civ 1056; [2004] 1 WLR 233 at [16], as approved by the CA in R (Holmcroft Properties Ltd) v KPMG LLP [2018] EWCA Civ 2093; [2020] Bus LR 203 at [47]:
“…the law has now been developed to the point where, unless the source of power clearly provides the answer, the question whether the decision of a body is amenable to judicial review requires a careful consideration of the nature of the power and function that has been exercised to see whether the decision has a sufficient public element, flavour or character to bring it within the purview of public law. It may be said with some justification that this criterion for amenability is very broad, not to say question-begging. But it provides the framework for the investigation that has to be conducted.”
The conflict between parties was over whether the “nature of the power and function” exercised in the three challenged decisions had “sufficient public element, flavour or character” to bring them within the purview of public law.
Summary of the claimant's submissions
The claimant submits that the defendant is established by statute to determine complaints by consumers against firms authorised by the FCA.. It is therefore a public body exercising public law functions meaning it is generally amenable to judicial review. However, at the outset it is important to recognise that the three challenged decisions offering compensation were not exercised under any statutory power and the compensation offered were ex gratia payments. The claimant submits this does not matter for two reasons. First, the claimant submits ex gratia payment schemes are or can nevertheless be reviewable on familiar judicial review grounds, relying upon R (Mullen) v Secretary of State of the Home Department [2004] UKHL 18; [2005] 1 AC 1 and specifically R (Moore) v Skipton Fund Ltd [2010] EWHC 3070 (Admin); [2010] 12 WLUK 5 at [30]:
“Mr Singh accepted that the starting point was that there was nonetheless no legal obligation at all to make payment, and any such payments do not represent compensation for losses for which the SSH is legally liable. He also recognised that such cases concern the allocation of public resources, and the courts will be cautious before intervening. However, such schemes and their application are reviewable on familiar judicial review grounds…”
Second, the claimant submits that the three challenged decisions have sufficient public element, flavour or character to fall within the purview of public law because they related to a complaint (the service complaint) about the exercise of the defendant's statutory functions (the consumer complaint). As the consumer complaint was subject to a statutory scheme, it follows, says the claimant, that the service complaint relating to it is afforded sufficient public element, flavour or character to bring it within the purview of public law. In short, the non-statutory service complaint is said to fall within the purview of public law because of its nexus with the earlier statutory consumer complaint.
Summary of the defendant's submissions
The defendant accepts that it is amenable to judicial review in respect of the statutory discharge of its public law functions under the Financial Services and Markets Act 2000 (“ FSMA”). However, it submits that this does not cover its ex gratia voluntary non-statutory service complaint scheme, which does not deal with the substantive complaints under the FSMA. Rather, as the name suggests, the service complaint scheme deals with service issues relating to how the defendant's public law functions were carried out when deciding the substantive complaints under the FSMA. Hence, the IA's Terms of Reference provides that the scope of any review is to “consider complaints about the standard of service and practical handling of a case provided by the Financial Ombudsman Service but not about its outcome, the merits of the complaint, or its commercial and legal obligations.”
The non-statutory service complaint scheme
It is common ground that the defendant's non-statutory service complaint scheme involves a three-stage process:
(1) a complaint is initially made and determined by an Ombudsman Manager;
(2) if dissatisfied with this decision, the complainant may refer...
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