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

In informal financial-ombudsman proceedings, fairness does not generally require the decision-maker to identify every aspect of a comparison which may influence the decision. A regulated adviser who is familiar with the applicable guidance must address all relevant benefits and disadvantages of competing pension products. Financial advice must be distinguished from regulatory compliance: non-compliant advice may nevertheless be appropriate, but compensation normally requires inappropriate advice which caused loss. A material mistake of established fact may justify judicial review where it affects the decision. An immaterial factual mistake does not. The claim was dismissed because the Ombudsman was entitled to find the advice inappropriate and the admitted factual error could not have affected the result.

The claimant, a financial adviser, sought judicial review of a decision by the Financial Ombudsman Service concerning advice given to an investor who did not join her employer’s occupational pension scheme. The Ombudsman found that the advice failed to satisfy the applicable pensions-review standards, was inappropriate, and caused loss. The claimant alleged procedural unfairness because he had not been expressly asked to address particular scheme benefits, and alleged a material mistake of fact concerning the value of benefits available on leaving within two years.

The central issues were whether the Ombudsman had acted fairly in determining the complaint on the material before him, and whether the admitted factual mistake rendered his decision unlawful.

1. Outcome. The claim for judicial review was dismissed.
2. Fairness and the scope of the inquiry. The Ombudsman was entitled to compare the rival pension schemes even though the complainant had not made that comparison. The scheme was intended to provide an informal but informed adjudication for complainants who might be unable to identify defects in financial advice themselves. The claimant and his solicitors were entitled to know the areas of concern, but the Ombudsman was not required to identify every relevant benefit individually.
3. Compliance and appropriateness. Compliance concerns the regulatory requirements as to procedure and content, including obtaining and recording relevant information and making a written comparison of competing products. Appropriateness concerns whether the advice was correct for the particular investor. The requirements are interdependent, but non-compliant advice may nevertheless be appropriate. Compensation normally requires advice that was inappropriate and caused loss.
4. Application to the advice. The claimant was required to be familiar with the Pensions Review Guidance. The interim decision, the letter enclosing information about the occupational scheme, and the request for further representations made clear that the claimant had to address the appropriateness of the advice in light of the scheme’s relevant benefits. His solicitors instead treated the anticipated length of employment as the principal issue. The Ombudsman was therefore entitled to proceed on the basis that the advice was inappropriate. He was also entitled to infer causation because the investor had accepted the advice and there was no evidence that she would have rejected advice to join the occupational scheme.
5. Mistake of fact. A misunderstanding or ignorance of an established and relevant fact may provide a ground for judicial review, subject to materiality. The Ombudsman mistakenly believed that the transfer value included an additional time-value element beyond the contributions equivalent premium. The mistake concerned the value available if the investor left within two years, whereas the Ombudsman’s decision rested on the probability that she would remain employed for more than two years. In any event, the mistaken element was quantitatively negligible. It was therefore immaterial and did not justify quashing the decision.

not stated in the judgment.