The Queen on the Application of DOMINIC O’CARROLL v FINANCIAL OMBUDSMAN SERVICES LIMITED

The Financial Ombudsman determines complaints by reference to what is fair and reasonable in all the circumstances. On judicial review, the court applies an unreasonableness or irrationality standard to the Ombudsman’s substantive conclusions and findings. The court must not second-guess evaluative assessments of evidence or substitute its own view. Reasons are legally adequate where they explain in clear and comprehensible terms why the complainant lost. A claimant’s disagreement with the Ombudsman’s assessment does not establish irrationality. At an oral renewal hearing, the ordinary circumstances of persistence, prior warnings and incurred costs do not ordinarily justify departing from the usual costs position.

This was a renewed application for permission to bring judicial review proceedings against seven linked decisions of the Financial Ombudsman Services Limited dated 16 December 2020. The decisions concerned complaints about advice given by S4 Financial Services Limited regarding unregulated collective investment scheme investments between March 2005 and October 2010.

Permission had previously been refused on the papers by Collins Rice J on 16 July 2021. The claimant alleged that the Ombudsman’s conclusions were irrational and inadequately reasoned, particularly concerning the characterisation of his overall portfolio and what he would have done if the investment risks had been accurately described. The court also considered applications concerning costs.

1. Permission refused. The Ombudsman’s decisions were clearly and logically reasoned and gave legally adequate reasons explaining why the complaints had been rejected.
2. Under Financial Services and Markets Act 2000, section 228(2), the Ombudsman was required to form an opinion as to what was fair and reasonable in all the circumstances. The statutory task involved an overall evaluative judgment.
3. The applicable judicial review standard for the Ombudsman’s substantive conclusions and findings was unreasonableness or irrationality, applying [2008] EWCA Civ 642. The court was not entitled to second-guess the Ombudsman’s assessment of the evidence or the evaluative conclusions drawn from it.
4. The Ombudsman was entitled to distinguish between the suitability of the UCIS investments viewed in isolation and the suitability of the claimant’s overall balanced-risk portfolio. It was also entitled to assess, on the evidence, what the claimant would have done had the risks been accurately explained. The claimant’s disagreement with those conclusions did not disclose an arguable irrationality challenge.
5. The reasons requirement was approached by asking whether the complainant had been told in clear and comprehensible terms why he had lost, applying [2008] EWHC 2142 (Admin). The decisions satisfied that requirement. The alleged finding that the claimant knew or ought to have known that the investments were high-risk did not materially underpin the decisions.
6. The Ombudsman’s application for additional costs was refused. The costs order made by Collins Rice J on 16 July 2021 remained in force. The ordinary features of a renewed permission hearing did not amount to sufficient exceptional circumstances to justify a further order or disturbance of the existing order.

Permission for judicial review was refused on the papers by Collins Rice J on 16 July 2021. The renewed application was refused by the Administrative Court.