British Bankers Association, R (on the application of) v The Financial Services Authority & Anor

Under the Financial Services and Markets Act 2000, excluding FSA Principles from civil actionability removes only a court cause of action. It does not prevent the Principles informing complaint handling or the Ombudsman’s assessment of what is fair and reasonable, including redress.

Specific rules do not ordinarily exhaust the overarching Principles. They may be augmented where they leave a regulatory gap, but the Principles cannot contradict an express requirement. The statutory scheme for widespread failures does not impliedly exclude other regulatory powers. Complaint-led, guidance-based root-cause measures were lawful because they lacked the universal compulsion, regulatory control and enforceable scheme effect of a statutory redress scheme.

The British Bankers Association sought judicial review of the FSA’s Policy Statement 10/12 on assessing and redressing PPI complaints and of the FOS’s Online PPI Resource. It argued that non-actionable FSA Principles could not generate redress obligations; that Principles and common failings could not contradict or augment specific ICOB rules; and that root-cause measures unlawfully bypassed the statutory scheme in section 404 of the Financial Services and Markets Act 2000. The FSA and FOS defended the measures, while Nemo supported the claim. The central issues were statutory construction, the scope of the Ombudsman’s fair-and-reasonable jurisdiction, and the relationship between section 404 and other regulatory powers.

Disposition. Permission was granted to argue all three grounds, but each ground was rejected and the claim was dismissed.

1. Actionability. Section 150 of the Financial Services and Markets Act 2000 concerns whether contraventions of rules give rise to a cause of action in court. Section 150(2) removes that actionability for specified Principles, but does not remove their other legal or regulatory functions. The Principles may therefore inform complaint handling and redress.
2. Ombudsman jurisdiction. The Financial Ombudsman Service must decide complaints by reference to what is fair and reasonable in all the circumstances. Its statutory and procedural framework permits consideration of law, rules, guidance, codes, standards, industry practice and previous decisions. The authority of R (Heather Moor & Edgecomb Ltd) v FOS [2008] EWCA Civ 642 confirmed the breadth and non-legalistic character of that jurisdiction.
3. Principles and specific rules. The Principles are the continuing regulatory substrata. Specific rules are particular applications of them and do not ordinarily exhaust their scope. The Principles may lawfully augment specific rules or fill regulatory gaps, but cannot require conduct which a specific rule forbids or contradict an express requirement. The restatement of Principle 7 using a reasonable-steps qualification was directed to actionability and did not limit the wider regulatory role of the unqualified Principle.
4. The Ombudsman may, where the circumstances warrant it, uphold a complaint based on the Principles even if specific rules have been complied with. Such a decision must be adequately reasoned. This was a significant observation concerning the breadth of the statutory function.
5. Section 404. The existence of circumstances capable of satisfying section 404 does not, by itself, deprive the FSA of other powers. The court must examine the purpose, nature and effect of the statutory scheme and the alternative measures to determine whether the latter unlawfully circumvent the statutory procedure and its protections.
6. The challenged root-cause measures were a lawful extension of existing complaint-handling rules. They remained guidance-led and dependent on a firm identifying recurring or systemic problems. They did not impose universal compulsory sector-wide reviews, the same regulatory control, or the enforceable scheme consequences of section 404. They were therefore not an impermissible evasion of that section. Authorities including R v Liverpool City Council ex parte Baby Products Association [2000] LGR 171, Credit Suisse v Waltham Forest London Borough Council [1997] QB 362 and R v J [2004] UKHL 42 illustrated principles whose application depended on the statutory context.