Bluefin Insurance Services Ltd, R (On the Application Of) v Financial Ombudsman Service Ltd

The court considered a judicial review challenge to a Financial Ombudsman Service (FOS) ombudsman's decision that an individual, Mr Lochner, was an "eligible complainant" because he was a "consumer" under the DISP rules. Key legal issues were whether the question of eligibility (being a consumer) was a question of precedent fact for the court, the correct temporal point for assessing eligibility, and whether FOS misdirected itself on the meaning of "consumer" in DISP 2.7.3R and the Handbook Glossary.

The court held that access to the FOS compulsory jurisdiction depends on objective, limiting conditions in FSMA and the DISP rules and that the question whether a complainant is a consumer is properly treated as a precedent fact. The court further held that the relevant time for assessing eligibility is when the complaint is brought and that FOS had misdirected itself in law by concluding that Mr Lochner was acting for purposes outside his trade, business or profession merely because he complained in his personal capacity about denial of D&O cover. Because the complaint related to loss arising from alleged wrongful acts in the course of his trade or profession, he was not a consumer for DISP purposes. The ombudsman’s jurisdictional decision was quashed.

Background and nature of the application

The claimant broker (Bluefin) sought judicial review of a decision of a FOS ombudsman dated 3 May 2013 that the interested party, Mr Lochner, was an eligible complainant (a "consumer") such that FOS had compulsory jurisdiction to investigate his complaint that the broker failed to notify an insurer of a potential D&O claim. The claimant sought quashing of that jurisdictional decision.

Parties and facts

• Bluefin (the claimant) acted as insurance broker for Betbroker Ltd, the policyholder of a directors and officers policy (D&O policy).
• Mr Lochner, a director of Betbroker, was an insured person under the policy. A third party (AAM) brought proceedings against him for alleged wrongful acts in the course of his role as director; the insurers denied cover on the ground of non-notification.
• Mr Lochner complained to FOS that the broker failed to pass on his notification to the insurer, resulting in loss to him personally. FOS decided he was an eligible complainant because he was a consumer under DISP.

Procedural posture

Permission for judicial review was initially refused on the papers but was granted on renewal. The court framed three issues for decision: (i) whether the question of consumer status is a precedent-fact issue for the court, (ii) if not, whether FOS misdirected itself in law, and (iii) if not, whether the decision was Wednesbury irrational.

Issues for decision and reasoning

• Precedent fact: The court held that eligibility to access FOS compulsory jurisdiction depends on objective limiting conditions in FSMA and the DISP rules and that whether a complainant is a "consumer" is a question of precedent fact. The court relied on the statutory architecture (sections 225, 226 FSMA, DISP) and relevant authority (including Croydon) to reach that conclusion.
• Timing: The court held the relevant time for assessing eligibility is the time the complaint is brought, consistent with DISP wording.
• Meaning of "consumer": The court considered the definition in the Handbook Glossary ("any natural person acting for purposes outside his trade, business or profession") and the factual context. It concluded that Mr Lochner’s complaint sought redress for loss arising from liabilities incurred in the course of his trade or profession (the AAM proceedings) and therefore his purpose in bringing the complaint was not outside his trade, business or profession. FOS had misdirected itself by treating the fact that the claim would benefit him personally as determinative of consumer status.

Result

The court quashed the FOS jurisdiction decision. It concluded Mr Lochner was not an eligible complainant and FOS had no compulsory jurisdiction to entertain his complaint.

The court allowed the claim for judicial review and quashed FOS's jurisdiction decision. The court held that eligibility (whether a complainant is a consumer under DISP) is a precedent-fact question for the court, the relevant time for assessing eligibility is when the complaint is brought, and FOS misdirected itself by concluding Mr Lochner was acting for purposes outside his trade, business or profession when the subject matter of his complaint related to liabilities incurred in the course of his trade; accordingly, FOS had no compulsory jurisdiction.

Permission for judicial review was initially refused on the papers by Lang DBE on 16 September 2013 and subsequently granted on oral renewal by Blair J on 12 February 2014. The present judgment is a first-instance decision of Wilkie J quashing the FOS jurisdiction decision.