Rules, Principles and Ombudsmen: Norwich and Peterborough Building Society v The Financial Ombudsman Service
| Published date | 01 September 2003 |
| DOI | http://doi.org/10.1111/1468-2230.6605006 |
| Date | 01 September 2003 |
Rules, Principles and Ombudsmen: Norwich and
Peterborough Building Society vThe Financial
Ombudsman Service
Richard Nobles
The judgment in Norwich and Peterborough Building Society vthe Financial
Ombudsman Service
1
provides good evidence of the drawbacks of rule based
adjudication, and the need for ombudsmen to be able to rely on principles of
fairness. Further, it demonstrates, to those who associate ombudsmen and
general standards of fairness with arbitrary and subjective decisions,
2
how such
determinations are constructed through, and constrained by, the legal context
of codes, rights, etc in which the assessment is made. The decision also
demonstrates an attempt to create a division of labour when courts and
ombudsmen operate alongside each other, with the courts having a monopoly
on the interpretation of legal rules, and ombudsmen being left to determine,
with only minimal restrictions, a principled basis for the assessment of fairness.
This note will begin by introducing the Financial Ombudsman Service (the
Service) and the issues raised in the case. It will then deal with the facts which led
to the complaint and informed both the Service’s decision and the judgment. With
this information, the reader should be equipped to understand the implications of
the court’s approach to both the interpretation of legal rules and the power given
to ombudsmen to decide what is fair.
The Financial Ombudsman Service
The Service represents the latest and most powerful private sector ombudsman.
3
Replacing a number of earlier private sector ombudsman schemes,
4
the Service is
authorised to resolve disputes arising between financial institutions and their
customers, on the basis of what is ‘fair and reasonable’.
5
The Service is expressly
Reader, Law Department, London School of Economics. Thanks are due to James Penner,
David Schiff and the three anonymous referees, all of whom helped to change what I now know to
have been a disorganised draft into what I now hope is a readable and more interesting case note.
1 14 November 2002; [2002] EWHC 2379; (2003) 100(3) LSG 30; Times, 13 December, 2002.
2 See, for example, Mr Justice Lightman’s view, drawing comparison with the origins of equity, that
justice may vary with the length of each ombudsman’s foot, ‘The Pensions Ombudsman and the
Courts’ (May 2001) 88 Pensions Lawyer 1 at 8.
3 See R. James and P. Morris, ‘The Financial Ombudsman Service: A brave new world in
‘‘Ombudsmanry’’?’ [2002] PL 640; and R. James and P. Morris, ‘The New Financial Ombudsman
Service in the U.K.’ in C. Rickett and T. Telfer (eds), International Perspectives on Consumers
Access to Justice (Cambridge: CUP, 2002).
4 The amalgamation process is described in Laying the Foundations: The First Annual Report,
Financial Ombudsman Service (2000).
5 Financial Services and Markets Act 2000, s228(2). The Building Society Act 1986, s84(2) provides:
‘Determinations of complaints yshall be made by reference to what is, in the adjudicator’s
opinion, fair in all the circumstances of the casey’
rThe Modern Law Review Limited 2003 (MLR 66:5, September). Published by Blackwell Publishing Ltd.,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA. 781
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