Holmcroft Properties Ltd, R (on the application of) v KPMG LLP & Ors

A private body is not amenable to judicial review merely because it performs an important role in a scheme established to achieve public regulatory objectives. The court must assess the nature of the function and whether it has sufficient public-law flavour. Relevant considerations include the source of the power, the voluntary or statutory character of the arrangements, the body’s relationship with affected persons, and whether the public authority itself was obliged to perform the function. A contractual skilled person appointed under a voluntary redress scheme was not amenable to judicial review. Even if public-law duties had applied, procedural fairness required disclosure of the gist of the reasons and material relied upon, not the full underlying records.

The claimant challenged KPMG’s approval of Barclays’ refusal to compensate it for consequential loss arising from the mis-selling of interest-rate hedging products. Barclays had voluntarily agreed with the FCA to operate a customer redress scheme, subject to independent review by KPMG. KPMG could approve offers only if they were appropriate, fair and reasonable.

The claimant alleged that Barclays had relied on undisclosed material and that KPMG had acted unlawfully in approving the resulting offer. The principal issues were whether KPMG was amenable to judicial review and, if so, whether the process followed in rejecting consequential loss was unfair.

1. Amenability. The application was dismissed. The source of a power is not decisive: a contractual body may be amenable to judicial review where it exercises a function with a sufficient public element, flavour or character. The question requires careful analysis of the nature of the function.

2. KPMG was closely woven into the FCA’s regulatory scheme. Its approval controlled Barclays’ offers and its work assisted the FCA’s regulatory objectives. Those features pointed towards amenability. They were outweighed by the voluntary nature of the arrangement, the contractual source of KPMG’s powers, the absence of any relationship with customers, the fact that the FCA had merely approved KPMG’s appointment, and the absence of any statutory obligation on the FCA to perform KPMG’s function itself. KPMG therefore lacked a sufficient public-law element.

3. Even if KPMG had been amenable, any public-law duty had to be consistent with the contractual engagement. KPMG was not required to deal directly with customers or create an independent review process. It could assess fairness only on the material available to Barclays, although it could require further information or representations before an offer was made.

4. Procedural fairness required Barclays to provide enough information to enable an informed response to its provisional decision. In this context, a fair summary or gist of the reasons and relevant material was sufficient. There was no duty to disclose the full records or every document relied upon.

5. Barclays’ summary substantially and accurately reflected its records. The omissions did not prevent informed representations. KPMG had in any event reviewed the offer and the further representations. There was therefore no procedural unfairness or material breach of any assumed public-law duty.