Reacting to the decision in Clark v In Focus, FOS has updated its technical notes to help guide complainants who might have previously sought to top up their award in Court. Given its recent guidance about not needing lawyers, it is something of a volte-face that FOS recommends that complainants seek legal advice on large FOS awards.
Since the day of the Court of Appeal's decision, the FOS guidance has said:
"can the consumer accept our decision and take the financial business to court for the balance?
There has been legal action in the courts to clarify the position about whether a consumer who has accepted our decision can then go on to pursue the business for further compensation. It seems very unlikely that a consumer could do so. However, whether or not we uphold their complaint, the consumer may wish to consider getting their own independent legal advice before deciding whether they would be better off taking a financial business to court.
There are time limits that apply for taking cases to court - and these will continue to run while a case is with us."
Lady Justice Arden was very clear in her judgment in Clark v In Focus about her fears that "complainant[s] may be able to use an award as a fighting fund for legal proceedings", thereby risking their award on an unsuccessful court claim. Notwithstanding, FOS is advising complainants to make a complaint and then bank a pending award. Once they know that they have a guaranteed award, they are then advised to seek legal advice to determine whether they should take the FOS maximum (and anything additional the firm is prepared to pay pursuant to an unenforceable 'recommendation') or gamble on successful litigation at Court.
The recommendation that claimants should seek legal advice is contrary to FOS's own recent guide on the subject which states that complainants need not be represented. Whilst I can see the logic of the need for legal advice in respect of claims exceeding the statutory maximum, it looks odd for FOS to be referring complainants to lawyers.
Given that its earlier advice to complainants still stands, will FOS now take it upon itself to 'advise' complainants to consider rejecting FOS awards and go to lawyers? Whilst it would be fascinating to see the effect of the different jurisdictions, I anticipate that many complainants who try their luck in court would be in for a shock – and so too therefore would FOS.