iDealing.com Limited, R (on the application of) v Financial Ombudsman Service Limited

A voluntary, non-statutory service-complaint scheme operated by a body exercising statutory quasi-judicial functions is not necessarily amenable to judicial review. The relevant question is the nature of the power and function exercised in the challenged decision. A connection with an earlier statutory decision does not, without more, give the later decision a sufficient public element, flavour or character.

Where the statutory scheme gives respondent firms no entitlement to recover legal costs, those costs cannot ordinarily be recovered as compensation under a separate service scheme whose remit concerns service standards rather than the merits or outcome of the underlying complaint. A decision-maker does not unlawfully fetter discretion merely by accepting an independent assessor’s recommendation where the recommendation has been considered.

iDealing.com Limited sought judicial review of three decisions concerning its complaints about the Financial Ombudsman Service’s handling of an earlier consumer complaint. The challenged decisions offered compensation of £500, later increased to £750, but refused the claimant’s request for legal costs exceeding £74,000.

The claimant alleged, among other matters, application of unpublished guidance, failure to apply the Independent Assessor’s Terms of Reference, fettering of discretion, procedural unfairness and Wednesbury unreasonableness. The preliminary issue was whether the voluntary service-complaint scheme and its decisions were amenable to judicial review because of their connection with the Ombudsman’s statutory consumer-complaint functions.

1. Amenability. The court applied the test requiring careful consideration of the nature of the power and function exercised to determine whether the decision has a sufficient public element, flavour or character to fall within public law: R (Beer) v Hampshire Farmers’ Market Ltd [2003] EWCA Civ 1056; R (Holmcroft Properties Ltd) v KPMG LLP [2018] EWCA Civ 2093. The challenged decisions arose under a voluntary, non-statutory scheme intended to improve the defendant’s service. Their connection with the earlier statutory consumer complaint did not alter the nature of the power exercised. The claim was therefore not amenable to judicial review.
2. The claimant could not rely on authorities concerning governmental or prerogative ex gratia compensation schemes. Those authorities did not establish that this voluntary scheme was reviewable. The statutory framework also gave respondent firms no entitlement to recover legal costs in dealing with consumer complaints, and imposed statutory immunity in relation to the compulsory jurisdiction.
3. Grounds of challenge. The first decision did not involve application of an unpublished policy. Although relevant managerial guidance should have been known and taken into account, it was highly likely that the outcome would not have been substantially different. The Independent Assessor’s Terms of Reference did not require independence from the defendant’s Board or exclude employment by the defendant. The word “damage” did not extend to legal costs, particularly since the scheme excluded the merits and outcome of the underlying complaint.
4. The Independent Assessor considered the claimant’s impact by referring to the unnecessary effort caused by poor service. The Chief Ombudsman’s acceptance of the recommendation was not an unlawful fetter: the evidence did not show that the recommendation had been rubber-stamped without consideration. The absence of reasons for refusing legal costs in the first decision was arguably a procedural failing, but the statutory and scheme framework made the outcome immaterial. Decisions 2 and 3 disclosed no procedural unfairness.
5. The decisions were not Wednesbury unreasonable. Even if amenable, permission would have been refused on all grounds under section 31(3D) of the Senior Courts Act 1981, because it was highly likely that the outcome would not have been substantially different.