The Financial Services Ombudsman Bureau (the “FSO”) is becoming an increasingly popular forum for the resolution of disputes between insurers and policyholders. Insurers should, therefore, be familiar with the FSO and how it works to resolve disputes as well as the extent of the FSO’s powers and how it goes about using those powers. In three important recent High Court cases, the Irish High Court has considered the role of the FSO and the scope of his jurisdiction.
In particular, the decision in Lyons v. FSO casts doubt over previous confirmation of the FSO’s discretion to hold an oral hearing and questions whether it is appropriate for the FSO to have a role in determining commercial disputes.
Two other High Court decisions, meanwhile, confirm that an unsuccessful complainant before the FSO cannot have another bite of the cherry by bringing High Court proceedings, and that the High Court will not consider appeals solely related to quantum.
- Lyons v. FSO
In Lyons v FSO 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 and another) 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.
- O’Hara v. ACC Bank
Also of note is the decision in O’Hara v. ACC Bank, which did not involve an appeal of a decision by the FSO but an attempt by the Plaintiff to bring separate High Court proceedings following the prior determination of his complaint by the FSO. The High Court prevented the Plaintiff from taking another bite of the cherry and held that the principle of issue estoppel through abuse of process embraces not only issues previously tried by a judicial or quasi-judicial tribunal but issues which could and should not have been included for adjudication in the earlier determination. The Court concluded that the Oireachtas has made any determination by the FSO subject only to an appeal and absent a special reason of sufficient impact to nullify any potential abuse of process or unconstitutionality, it would be wrong for a court to say that the complaint could be re-litigated all over again. In light of this decision, claimants must 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 proceed before the Courts, but it is clear they cannot do both.
- De Paor v. FSO
Finally, the judgment of the High Court in De Paor v. FSO confirmed that the High Court will not consider an appeal of a decision by the FSO which is essentially an appeal on quantum alone. The High Court reiterated that its jurisdiction in such appeals is limited to consideration of whether the adjudicative process (as a whole) was flawed or erroneous, and does not extend to whether the Court would have awarded a greater sum for stress and inconvenience, having regard to all of the surrounding facts.
The underlying complaint to the FSO was against Quinn Healthcare arising from incorrect advice provided to the complainant in relation to cover for chemotherapy and radiation treatment at the time she changed her health insurance plan. The FSO made a number of findings, only one of which was appealed to the High Court by the complainant, namely the award of compensation in the sum of €850 made by the FSO for distress and inconvenience.
Justice McGovern was guided by the purpose of the legislative scheme establishing the office of the FSO which is to keep the process, so far as possible, out of the courts. The scheme is aimed at the informal resolution of consumer issues, with Justice McGovern highlighting that its purpose would be frustrated if the Courts were to treat such matters such as the appeal before the Court as appeals on quantum in the usual sense. While expressing regret, the Court dismissed the appeal.