Bunney v Burns Anderson Plc & Anor

A respondent may challenge the formal validity of a Financial Ombudsman determination in enforcement proceedings where the statutory scheme does not clearly restrict challenges to judicial review. A determination accepted by the complainant is final as to its merits, but that does not validate an act exceeding the Ombudsman’s powers.

The powers to make a money award and a direction are cumulative. However, the substance of the determination governs its classification. A direction requiring payment of money for the complainant’s benefit is a money award and is subject to the statutory monetary limit, even where the amount is to be calculated later. An invalid direction cannot be enforced by injunction.

Mr Bunney and Mr Cahill each accepted a determination made by the Financial Ombudsman concerning unsuitable pension advice. The determinations required redress calculated by reference to pension benefits. The resulting sums appeared to exceed the £100,000 monetary limit applicable to money awards under the Financial Services and Markets Act 2000.

Each respondent firm was willing to pay £100,000 but disputed liability for any greater sum. The complainants sought injunctions compelling compliance. The firms contended that the Ombudsman had exceeded his powers and that they could raise that issue as a defence to enforcement proceedings. The central questions concerned the permissible procedure for challenging the determinations and the scope of the Ombudsman’s powers under section 229.

1. The claims for injunctions were dismissed. The firms were entitled to raise, in the enforcement proceedings, the question whether the Ombudsman had formal jurisdiction to make the determinations. They were not confined to judicial review. The words “final and binding” in section 228(5) concerned the merits of a valid determination and did not validate a purported determination made outside the Ombudsman’s powers.

2. The procedural exclusivity principle in O’Reilly v Mackman had lost much of its original force after the Civil Procedure Rules. A defendant could challenge a public law decision in proceedings brought against him where the challenge formed part of his defence to a private claim, subject to abuse of process and the requirement that the defence have a reasonable prospect of success. There was a strong presumption against construing legislation as removing that right unless Parliament used clear words.

3. The powers under section 229(2)(a) and (b) were cumulative. A determination could include both a money award and a direction. Nevertheless, classification depended on substance rather than form. If the determination required payment of money to the complainant or for his benefit, it was a money award and could not be enforced beyond the statutory cap. A direction whose future cost was initially unknown was implicitly limited in the same way once the cap was reached.

4. Mr Bunney’s determination required a loss assessment and redress in accordance with regulatory guidance. It did not itself require payment of money. Any unresolved issue could be referred back to the Ombudsman, who would then be bound by the monetary limit. Mr Cahill’s determination required payments for an annuity and compensation for past pension shortfalls. Those requirements were money awards and were unenforceable beyond £100,000.

5. An injunction under section 229(9) remained discretionary, although there was ordinarily a strong presumption in favour of enforcing an outstanding valid direction. The court would not lend its aid to an invalid direction or grant an injunction serving no useful purpose.

First-instance decision. The judgment records that the court would be receptive to an application for permission to appeal because the conclusions departed from current thinking and the statutory scheme contained obscurities and lacunae.