Andrews v SBJ Benefit Consultants

An accepted final determination by the Financial Ombudsman Service may engage the merger doctrine. The FOS is a tribunal for this purpose because its statutory scheme permits the parties to present evidence and argument, requires a final determination, and makes an accepted determination binding. The relevant comparison is between the facts and losses relied upon, not the juridical label attached to the later claim. A claimant who accepts an FOS award cannot bring subsequent court proceedings seeking further recovery for the same subject matter. The availability of a non-binding recommendation does not preserve a right to litigate after acceptance. The FOS scheme provides an alternative dispute-resolution mechanism, and choosing it carries the ordinary consequences of accepting its final determination.

The claimant had transferred pension benefits following advice from the respondent. Liability for the inadequacy of the transfer advice had been accepted, but the parties disputed the proper calculation of redress. The claimant complained to the Financial Ombudsman Service about the respondent’s loss assessment. The FOS determined the complaint in his favour, awarded the statutory maximum of £100,000 together with ancillary sums, and recommended payment of any balance above that limit. The claimant accepted the determination, but later brought proceedings under section 150 of the Financial Services and Markets Act 2000 for further damages. The preliminary issues were whether the claim had merged in the accepted FOS award and, alternatively, whether the proceedings were an abuse of process.

The preliminary issue was answered affirmatively and the claim was dismissed.

1. Identity of subject matter. The juridical basis of a claim is distinct from the facts giving rise to it. A cause of action consists of the minimum facts required for success. The relevant question was whether the facts and losses relied upon in the court proceedings were the same as those considered by the FOS. They were. The absence of an express reference to section 150 did not alter the position.
2. FOS as a tribunal. The FOS was to be treated as a tribunal for merger purposes. The scheme was subject to Articles 6 and 1 of the First Protocol, its rules allowed representations, evidence and hearings, and its decisions were amenable to judicial review for irrationality or arbitrariness. Informality and the statutory direction to decide what was fair and reasonable did not make the FOS merely administrative.
3. Effect of acceptance. Under section 228(5) of the Financial Services and Markets Act 2000, the determination became binding on both parties when accepted. Before acceptance, the complainant could reject it and pursue court proceedings. After acceptance, the award was final and operated as a judgment or award for merger purposes. The claimant could not accept the award and also seek further compensation for the same subject matter.
4. The power to make a non-binding recommendation did not create a right to litigate after acceptance. The statutory scheme was intended as an alternative means of resolving disputes, not as a mechanism permitting concurrent or successive recovery.
5. The alternative abuse-of-process issue did not require determination. The respondent was entitled to its costs. An interim payment on account of costs of £24,000 was ordered, payable within two months. Permission to appeal was refused.