Green (t/a Green Denman & Co), R (on the application of) v Financial Ombudsman Service Ltd & Anor

The claimant sought judicial review to quash the Financial Ombudsman’s decision of 6 March 2002 which found that the claimant had not discharged his regulatory duty when advising Mrs Waring about pension arrangements and that she would have acted differently had compliant advice been given. The grounds advanced were procedural unfairness and mistake of fact. The court analysed the regulatory background (the PIAOB Terms of Reference, the PIA Pensions Review Guidance and the Financial Services and Markets Act 2000 transitional Order 2001, article 6(2)) and the factual record of the advice given in 1993. The judge held that the Ombudsman was entitled to determine the complaint by reference to the PIA guidance, that the claimant and his solicitors had been given opportunity and sufficient notice to address the matters raised (including detailed points about Courtaulds’ ancillary benefits and transfer values), and that the Ombudsman’s mistaken reference to a minor component of the transfer value was immaterial to his decision. The claim for judicial review was dismissed.

Background and parties:

• The claimant, a financial adviser, applied for judicial review of a decision of the Financial Ombudsman finding his 1993 advice to Mrs Julie Waring about pension arrangements non-compliant and inappropriate.
• The Ombudsman had assumed jurisdiction under the Financial Services and Markets Act 2000 and, under the Transitional Provisions Order 2001, was required to determine this existing PIAOB complaint so far as practicable by reference to the former PIA scheme criteria and the PIA Pensions Review Guidance.

Nature of the application and issues:

• The claimant sought quashing of the Ombudsman’s decision on two principal grounds: alleged procedural unfairness in the Ombudsman’s process and a mistake of fact in the Ombudsman’s decision (specifically an incorrect reference to an employer-added element of the transfer value).
• The court framed the legal issues as (i) whether procedural fairness required the Ombudsman to specify with greater particularity the elements of the employer pension scheme he regarded as relevant before deciding, and (ii) whether the admitted factual error was material and thus vitiated the decision.

Relevant facts and regulatory framework:

• The claimant had advised in 1993 that Mrs Waring should continue a personal pension rather than join her employer’s Courtaulds occupational pension scheme (OPS), on the basis that her likely period of employment might be only two to three years.
• The PIA Pensions Review Guidance set out detailed tests and required consideration and recording of ancillary benefits, employer contributions and other matters in any comparison between an OPS and a personal pension plan.
• The Ombudsman’s adjudicator concluded that the advice was non-compliant and inappropriate and that, on balance, a compliant adviser would have recommended joining the OPS. The Ombudsman accepted that his decision contained a factual error about the composition of the transfer value but said that error was immaterial.

Court’s reasoning and conclusion:

• The judge explained the distinct but related concepts of compliance and appropriateness of financial advice and emphasised that the Ombudsman may properly investigate matters which a lay complainant cannot be expected to identify.
• Because the claimant and his solicitors were, or should have been, aware of the Guidance and had opportunities to make further representations (including after the Ombudsman sent the Courtaulds letter about scheme benefits), the court held there was no unfairness in the procedure followed; the claimant elected not to address significant matters in his further representations.
• On the mistake of fact the Ombudsman had mistakenly described a minor added company time-value element as forming part of the transfer value; the judge accepted the error but found it quantitatively negligible and that the Ombudsman’s decision rested on the conclusion that it was probable Mrs Waring would have been employed for more than two years. The error was therefore immaterial.
• The court dismissed the claim for judicial review. The judge also refused permission to appeal and made limited costs directions.

The claim is dismissed. The court held that the Ombudsman acted fairly in the informal adjudicatory context, the claimant and his solicitors had adequate notice and opportunity to address the relevant aspects of the employer scheme and the PIA Pensions Review Guidance, and the Ombudsman's acknowledged factual error concerning a minor element of the transfer value was immaterial to the outcome.