Assurant General Insurance Limited, R (on the application of) v Financial Ombudsman Service Limited & Ors

The appeal concerned whether the Financial Ombudsman Service (FOS) had compulsory jurisdiction under the Financial Services and Markets Act 2000 (FSMA) to determine mis‑selling complaints about payment protection insurance (PPI) where the retailer which sold the PPI acted for the insurer. The principal legal question was whether the existence of an agency relationship between the retailers and Assurant was a matter for the court to decide as a question of law (including contract construction) or for the FOS to determine as a matter of fact subject only to public law review.

The Court of Appeal held that the true construction of the agreements between the insurer and the retailers is a question of law for the court and that the High Court was wrong not to construe those contracts. Having itself construed the material agreements, the Court concluded that the contracts, taken as a whole, created an agency relationship by implication: the retailer acted as Assurant’s agent in selling the policies. For those reasons the FOS was entitled to assert jurisdiction and the appeal was dismissed.

Background and parties:

• Assurant (the appellant) underwrote PPI sold by catalogue retailers to consumers. The second to fifth respondents were consumers who complained to the FOS that they had been mis‑sold PPI. The FOS (first respondent) accepted the complaints against Assurant on the basis that the retailers were acting as Assurant’s agents when selling the PPI.
• Assurant sought judicial review of four FOS jurisdiction decisions dated 26 October 2021 that accepted the complaints against it. Collins Rice J dismissed Assurant’s challenge in the Administrative Court ([2022] EWHC 2766 (Admin)). Assurant appealed to the Court of Appeal.

Nature of the claim / relief sought: The claimant sought judicial review of the FOS jurisdiction decisions and declaratory relief that the FOS had no jurisdiction because, on proper construction of the agreements, the retailers were not Assurant’s agents when selling PPI.

Issues framed:

1. What standard applies when a court reviews an FOS decision on jurisdiction: is the existence of agency a precedent fact for the court to decide (including by construing contracts) or principally a factual matter for the FOS reviewable only on public law grounds?
2. On proper construction of the agreements between Assurant and the retailers, did an agency relationship exist such that the FOS had jurisdiction?

Court’s reasoning:

• The Court reviewed FSMA provisions (notably Part XVI, section 225(1), section 226 and Schedule 17) and the FOS rules in DISP. It accepted that many fact‑finding matters are for the FOS and are reviewable only on conventional public law grounds, but it reaffirmed that the proper construction of a contract is a question of law for the court.
• The High Court was correct to recognise the general distinction between factual and legal questions but erred in declining to construe the relevant contracts itself and in treating the agency question as one to be left to the FOS on ordinary Wednesbury‑style review.
• On construing the Grattan/Freemans/Express Gifts agreements (considered as representative), the Court identified features indicating an agency relationship: significant control by Assurant over marketing and materials, fiduciary/accounting obligations in respect of premiums, exclusivity provisions, obligations to follow company guidelines and training, rights of inspection, and the contractual structure under which the retailer collected premiums and remitted sums to Assurant. Those features, taken together, pointed to an implied agency by which the retailer could create binding contracts between consumers and Assurant and was obliged to market and administer the insurer’s product.
• The appellant accepted that retailers had authority to create direct contractual relationships between consumers and Assurant, but argued that the retailers were not agents for the acts complained of (the sale). The Court rejected that narrower submission, concluding the agency extended to marketing and selling the cover.

Context and implications: The judgment recognises the specialist, iterative and informal nature of the FOS but emphasises that where a jurisdictional question turns on legal construction, the court must determine the law. It also confirms that where the court decides the law and the FOS has found facts, the court may set aside an FOS decision if the correct legal application to the facts shows lack of jurisdiction.

The appeal is dismissed. The High Court was wrong to decline to construe the relevant agreements, because the true construction of the contracts is a question of law for the court. Having construed the agreements, the Court concluded they created an implied agency relationship by which the retailers acted as agents of Assurant in marketing and selling the PPI, and therefore the FOS had jurisdiction to consider the complaints. The FOS’s jurisdictional decisions were upheld.

Appeal from a decision of the Administrative Court (Collins Rice J) dismissing Assurant’s judicial review challenge: [2022] EWHC 2766 (Admin). Permission to appeal was granted by Males LJ. The present judgment: [2023] EWCA Civ 1049.