Clark v In Focus Asset Management & Tax Solutions Ltd [2012] EWHC 3669 (QB).


In a surprise departure from previous authority to the contrary, the High Court has held that acceptance of an award of the Financial Ombudsman Service (“FOS”) did not prevent complainants from turning to the court to claim the balance of their loss, where their loss was alleged to exceed the FOS statutory maximum of £100,000 (now £150,000).


The case arose out of a complaint by Mr and Mrs Clark (“the Clarks”) that Focus Asset Management & Tax Solutions Ltd (“Focus”) wrongly advised them about their investments. The Clarks alleged that their losses exceeded £500,000 (i.e. in excess of the statutory maximum FOS award at the time of £100,000). The Clarks complained to the FOS and their claim was upheld by an adjudicator who recommended that Focus pay the full amount of the complaint.

The Clarks accepted the FOS’s decision but reserved their right to pursue the matter further through the civil courts. Focus duly paid the £100,000 and the Clarks commenced county court proceedings for the balance of their loss. Focus applied to strike out the claim on the basis that the court had no jurisdiction because the FOS award had been accepted.

The judge at first instance considered that he was bound by the decision in Andrews v SJB Benefit Consultants Ltd [2010] EWHC 2875 (Ch) which held that “as a matter of general principle a decision of the Ombudsman was to be treated as a court or tribunal for the purpose of the merger doctrine”. The Clarks appealed to the High Court.


In holding that the Clarks were entitled to pursue Focus in court for the balance of their loss above the £100,000 awarded by FOS, Cranston J held that “the doctrine of merger does not apply to determinations of the Ombudsman, which have been accepted. Nor does the statutory scheme preclude those like the appellants in this case from claiming damages from a financial services provider for an amount in excess of the Ombudsman’s determination, which they have accepted.”

Cranston J concluded that there were weaknesses in the judge’s conclusion in Andrews. In particular, Andrews ignored the statement of Rix LJ in Heather Moor that “[The FOS] is, after all, dealing with complaints, and not legal causes of action, within a particular regulatory setting.” In relation to this, Cranston J stated that – ”In my view that obiter dictum cannot be brushed to one side. The doctrine of merger turns on a cause of action being extinguished – it is merged in the judgment. If the Ombudsman considers complaints, not causes of action, as Rix LJ said, the doctrine of merger has no purchase in this context”.

In addition, Cranston J disagreed with the finding in Andrews that “the Ombudsman is a tribunal for the purposes of applying the principle of merger”. Cranston J held that “whether the doctrine of merger applies to the Ombudsman should be determined by a detailed analysis of its functions”. He examined a number of factors that are typical to a tribunal but were not present in relation to the FOS, so that irrespective of the classification of the issues which came before it, the FOS was not a tribunal to which the doctrine of merger could apply.


It is understand that Focus is seeking to appeal to the Court of Appeal. As Andrews and Clark are conflicting High Court judgments, the question of whether a claimant can seek to recover the balance of its losses via the courts further to a decision of FOS remains uncertain.