Heather Moor & Edgecomb Ltd, R (on the application of) v Financial Ombudsman Service

An oral hearing is not required in every Financial Ombudsman Service determination. It may be necessary where the complaint turns on disputed accounts of meetings or on a genuinely arguable issue of reliance or causation. Where the material facts are comprehensively recorded in writing and representations have been allowed, a paper determination may be procedurally fair.

Judicial review is concerned with procedural unfairness, irrationality and perversity, not with rehearing the merits or correcting alleged errors of fact or financial judgment. Structural supervision and budgetary control by the regulator do not, without more, establish that the ombudsman scheme lacks independence or impartiality under Article 6.

The claimant, an independent financial adviser, challenged a Financial Ombudsman Service determination concerning advice given to Captain Ross about transferring pension arrangements. It sought renewed permission for judicial review, contending that an oral hearing was necessary and that the ombudsman scheme was unfair and unlawful.

It also brought a freestanding application for declarations that the scheme lacked an independent and impartial tribunal and was incompatible with Article 6 of the European Convention on Human Rights. Permission had previously been refused by Mitting J, and the declaratory application had been referred to the Administrative Court by Burton J. The central issues were whether the complaint required an oral hearing and whether the statutory relationship between the Financial Services Authority and the ombudsman created apparent bias.

1. Applications refused. The renewed application for permission to seek judicial review and the freestanding application for declarations were both refused.
2. An oral hearing is not automatically required because a party considers a paper process frustrating. The Financial Ombudsman Service is inquisitorial rather than a conventional civil or criminal court, and Parliament established it to determine disputes using specialist expertise.
3. Following the approach in R (on the application of Heather Moor and Edgecomb Limited) v Financial Ombudsman Service [2008] EWCA Civ 642, an oral hearing may be necessary where determining the complaint requires resolving disputes about what was said at meetings, or where it can sensibly be argued that the complainant would have acted differently irrespective of the advice received. On the facts, the written records were comprehensive, the claimant had made representations, and an oral hearing would have added nothing.
4. Judicial review could not be used as a rehearing of the Ombudsman’s factual or financial conclusions. The relevant questions were procedural unfairness and irrationality or perversity. No such defect was established.
5. The Financial Services Authority’s supervisory, appointment and budgetary powers did not demonstrate that the Financial Ombudsman Service was biased. The material did not suggest that the Authority controlled decisions on individual complaints. A particular incident concerning complaints referred by the Authority could not undermine the whole scheme; at most, any affected transactions would have required case-specific challenge.
6. The scheme provided an independent and impartial tribunal and was compatible with Article 6 of the European Convention on Human Rights. Costs were awarded for the acknowledgments of service, but exceptional circumstances were not found and the costs of the oral hearings were refused.

Permission for judicial review was previously refused on the papers by Mitting J on 10 March 2009. A separate declaratory application was referred for hearing in open court by Burton J. The present court refused both applications.