Financial Ombudsman Service,
Financial Ombudsman Service and the European Convention on Human Rights -
Walter Merricks - Liberty
The fact is that a complainant is not bound by the decision of the Ombudsman
and can go to Court, a Firm has no such appeals process.
The internet is a useful resource:
The following links take you to the sources of the wordings selected from the
opinion of various bodies:
Building Societies Association
"Indeed, firms are bound by FOS decisions (as you would expect) but have
no way of taking the matter further if they feel an injustice has been done, and
therein lies the problem. As the FOS leaflet for complainants, Your complaint
and the Ombudsman, says: "If an ombudsman makes a formal decision on your
case, this will be final. Firms have to accept our decisions. But you don't. You
are free to go to court instead." Firms can ask for, but not demand, a
hearing in front of the ombudsman if they are unhappy with a provisional
decision, but how fair is a hearing where the FOS ombudsman makes a
determination on the decision of the FOS adjudicator? It is not an independent
process. The final decision (so far as the firm is concerned) is for the
ombudsman to make, and there is no provision for a hearing after that. The only
course of action open to firms is to seek judicial review, but this process is
not an appeal in the proper sense of the word. Rather, in a judicial review, the
courts look at the process through which a decision was made, instead of the
decision itself. In the end, to preserve competition for the benefit of the
consumer, firms may have no alternative but to turn to the human rights
legislation. Article 6 of the European Convention on Human Rights, part of UK
law since the passing of the Human Rights Act 1998, states that, in the
determination of civil rights and obligations, everyone is entitled to a fair
and public hearing by an independent tribunal established by law. Judicial
decisions make it clear that not only individuals, but also corporate bodies
have human rights. It is possible that this legislation will give firms a right
of appeal not available to them through the Financial Services and Markets
Council's Annual Report 2002
Financial Ombudsman Service
4.. In our last Annual Report we mentioned that we were also giving
consideration to claiming a supervisory role over the Regulatory Decisions
Committee of the FSA and over the Financial Ombudsman Service (FOS). So far as
the FSA's Regulatory Decisions Committee is concerned, we put in a detailed
response to the consultation on the FSA's Enforcement Manual. However, we have
decided that supervision by us would not be appropriate, since the Regulatory
Decisions Committee is not an independent adjudicative body but a part of the
FSA's decision making structure. We shall take an interest in the procedures of
the FSA to the extent that they impinge on the work of the independent Tribunal.
5.. The case of the FOS was different. We recognised that the 2000 Act
provides in terms for an "Ombudsman Scheme" and that the proposed
complaints handling arrangements had much in common with other ombudsman
procedures. However, we considered that once a party had indicated that it did
not accept the initial decision made by scheme staff and the matter was reviewed
by one of the ombudsmen, Article 6 of the European Convention on Human Rights
was fully engaged. The scheme is partly mandatory and decisions will be binding
on firms, who may be ordered to pay compensation up to £100,000 (a substantial
sum for smaller firms). There is no right of appeal to the courts. We thought
that in some instances Article 6 would require oral hearings to take place. We
have a particular interest in oral hearings, on which the proposed scheme rules
said little. We believe that if we were given supervision over oral hearings it
would enhance public confidence in the working of the scheme.
6.. However, the Treasury did not favour any part of the FOS scheme being
brought within our supervisory remit at this stage. They said that the FOS was
charged under the 2000 Act with resolving disputes quickly and with the minimum
of formality, and its procedure was intended to be inquisitorial rather than
adversarial. Oral hearings would not be the norm. Bringing the FOS within our
supervision could undermine those characteristics as well as confuse users as to
the nature of the service provided. Furthermore, the extent of the application
of Article 6 was uncertain in the light of developing case law.
7.. We ourselves had not found this a wholly straightforward matter. We
understand the reasons why supervision is not thought to be appropriate at this
stage but find it disappointing that our involvement could be thought to slow
down a process or to make it more formal. The Treasury expect to conduct a
review of aspects of the 2000 Act two years after it comes into force. We shall
be interested in that review and in particular in any further consideration that
may be given to oral hearings by the FOS and indeed the experience of the FOS in
this regard. We also note that the Leggatt Review recommended that we should be
given supervision over the FOS.
Walter Merricks' Speech
What will the judges say?
What the courts themselves may make of all this will be interesting. We are
certainly a public body, and will be exposed to actions for judicial review.
There has been much comment about the circumstances in which we will be required
9 Bingham L J (as he then was) in Watts v Morrow  4 All ER 937.
(following the Human Rights Act) to offer parties a "fair and public
hearing". A rather gloomy prediction of how the courts might view us has
recently been made by an academic commentator Richard Nobles10. He suggests that
the judges are jealous of or even hostile to rival dispute mechanisms,
particularly ones that seek to exercise powers denied to them. "The central
issue" he says "is whether it is appropriate for an official who is
not a regulator to decide complaints against private parties by reference to
standards and remedies that differ from those available in the courts. The
resounding answer provided by the courts themselves is no". I hope that is
too depressing a conclusion and that the judges would appreciate that the
benefits of operating as alternative dispute resolvers should not be abandoned
by straight-jacketing us into a court or tribunal model.
Our "jurisprudence" has developed avoiding some of the constraints of
a common law, precedent based system. We have been able to approach the dispute
resolution task in a way that, interestingly, tackles some of the criticisms
often levelled at the courts and the judges.
· We can talk freely to the outside world, discussing possible approaches to
· We do not have to pretend to "find" what the law is. We unashamedly
make new "law".
· Not being bound by precedent we can consult on changes and then enact them
from a given date.
· Unlike courts who refuse to consider hypothetical questions, we can consider
situations that have not yet arisen but look likely to do so.
· We intervene actively to reduce or prevent disputes arising.
· We feedback to the industry as a whole, or to particular firms ,and to the
world at large through a press office, the lessons we see. We do not rely on
court reporters to spread important messages.
· The ability of customers to access the scheme freely conditions the actions
of firms more effectively to act in accordance with our prescriptions, I would
assert, than the access to the courts and knowledge of the state of the law.
And finally the ombudsman model operating outside the court system has received
widespread support, from the financial industry, consumers and outside
10"Keeping Ombudsmen in their place"  Public Law 308
We deliver by offering reassurance to all customers we provide value for money
in supporting confidence in a much criticised, but vital, industry.
As an expert, independent and impartial source of adjudication we are unique.
As a result of pioneering, funding and managing voluntary initiatives, the
industry has, and I hope will maintain, a sense of pride, even
"ownership" in the model it fathered - a model that has gone from
brave bi-partisan experiment to Parliamentary endorsement in under 20
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