With the Financial Services Ombudsman (FSO) reporting a high level of complaints to his office in 2011, he has also been active in the courts, with a number of recent landmark rulings taking place.
In Lyons v FSO[1] the High Court held that the FSO’s decision to proceed without an oral hearing was an error in law and had negated the appellants’ (Lyons) constitutional rights to fair procedures. The Court held that without an oral hearing, the appellants could not have realistically hoped to establish the underlying merits of their case.
This ruling will have a significant impact on the FSO’s deliberations as to whether or not complaints should proceed to oral hearing. This in turn, as the Court acknowledged, will have significant cost and resource implications for the FSO in current times of austerity.
The Court also observed, by reference to the relevant legislation, that the nature of complaints now dealt with by FSO was such that it is now difficult, if not impossible, to distinguish between complaints to the FSO and commercial litigation involving banks and non-corporate customers. The Court suggested that an uncomfortable consequence of this is that a bank customer who had defaulted on his loan agreement may potentially fend off significant commercial litigation by initiating a complaint to the FSO. The Court suggested that a review of the proper scope and role of the FSO vis-à-vis the Court system was required.
Although not involving a direct appeal of an FSO decision, another related case of note is O’Hara v. ACC Bank[2]. Here, the plaintiff attempted to bring separate High Court proceedings following the prior determination of his complaint by the FSO.
In this instance, the High Court prevented the plaintiff from taking another bite of the cherry, holding that the ‘principles of estoppel’ cover issues both previously tried by a judicial or quasi-judicial tribunal and issues which could and should have been included for adjudication in the earlier determination. In layman’s terms, this principle provides that a plaintiff cannot seek a ruling through one particular forum (ie the FSO), and then, when a ruling has been provided (which may not be in their favour), seek to use another forum (ie the High Court) to re-argue the case.
The High Court concluded that as the Oireachtas has made any determination by the FSO subject only to an appeal, absent a special reason of sufficient impact to nullify any potential abuse of process or unconstitutionality, the complaint could not be re-litigated all over again.
In light of this decision, claimants must carefully decide whether to opt for the substantially cheaper option of making a complaint to the FSO - and accept the risk of an unfavourable finding - or take their chances before the Courts. However, it is clear that they cannot do both.
