Critchley, R (on the application of) v Bank of Scotland Plc (t/a Halifax) & Anor

An ombudsman determining a complaint under section 228(2) of the Financial Services and Markets Act 2000 must decide what is fair and reasonable in all the circumstances, while taking relevant law, rules, guidance, codes and good industry practice into account. DISP Appendix 3 creates an evidential, rebuttable presumption that a consumer would not have bought PPI following a substantially flawed sale. It is not merely a tie-breaker. The presumption may nevertheless be rebutted by a holistic assessment of the evidence and the consumer’s circumstances. An ombudsman may rationally depart from the guidance. Judicial review does not permit the court to substitute its view on the merits or the weight of evidence. The claim was dismissed.

The claimant sought judicial review of a Financial Ombudsman Service decision which rejected her complaint that Halifax had mis-sold credit-card PPI. The ombudsman accepted that the sale was substantially flawed, including failures concerning suitability, policy limitations and the cost of the policy, but concluded that the evidence rebutted the DISP Appendix 3 presumption and that the claimant would probably have bought the policy in any event.

The claimant alleged misinterpretation and misapplication of the FCA guidance, unlawful use of counter-presumptions through Navigator, irrationality, inadequate reasons and breach of the duty of utmost good faith. The central issues were the meaning and effect of the presumption, the permissible approach to evidence and the scope of judicial review.

1. Claim dismissed. The Ombudsman had lawfully determined the complaint by reference to what was fair and reasonable in all the circumstances under section 228(2) of the Financial Services and Markets Act 2000.
2. DISP Appendix 3 is guidance addressed to firms, but was a material consideration for the Ombudsman. Where a sale was substantially flawed, paragraph 3.6.2 established an evidential presumption that the consumer would not have bought the policy. The presumption was rebuttable and was not merely a tie-breaker. The Ombudsman was entitled to consider the evidence holistically, including the consumer’s demands, needs, intentions and individual circumstances.
3. The Ombudsman was entitled to conclude that the presumption had been rebutted. The policy was suitable in the particular circumstances despite the failures in assessing suitability. Eligibility was relevant to suitability. The Ombudsman had rationally weighed the policy’s benefits, cost, exclusions, limitations, duration of cover, employment benefits and the claimant’s financial position.
4. The court rejected the allegation that Navigator or an unlawful set of counter-presumptions had been applied. The decision demonstrated a detailed, individualised assessment and the Ombudsman had not used Navigator or its cost-benefit matrix in reaching the final decision.
5. The Ombudsman gave adequate and intelligible reasons. Judicial review was not an appeal on the merits, and the court could not substitute its assessment of the evidence or the weight to be given to the claimant’s recollection.
6. The duty of utmost good faith did not require disclosure of market-wide claims ratios or the commercial value of the policy. It extended to material facts concerning the nature of the risk or the recoverability of a claim, but not to requiring the insurer or intermediary to act as the insured’s broker.

First-instance judicial review in the Administrative Court. The claim concerned the Financial Ombudsman Service decision dated 14 December 2018.