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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 Act."



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 [1991] 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.

In particular

We can talk freely to the outside world, discussing possible approaches to decisions.

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 commentators.

10"Keeping Ombudsmen in their place" [2001] 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

Walter Merricks

Financial Ombudsman Service

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London E14 9SR


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