The High Court once again considered the right to an oral hearing before the Financial Services Ombudsman (the FSO) in the case of Carty Doyle -v- The Financial Services Ombudsman & anor [2014] IEHC 352, Herbert J, 15 July 2014. In this case, the court returned the case to the FSO for an oral hearing despite the fact that the appellant had not originally requested an oral hearing before the FSO in respect of any issue. The court pointed out that the power vested in the FSO to direct an oral hearing is not dependent upon him being requested to do so by either party. If circumstances arise which render an oral hearing necessary, the onus is on the FSO to direct such an oral hearing even if it is not sought.

The judge indicated that while there is normally a reluctance to accept an argument on appeal that was not advanced at first instance he was satisfied that in this case fundamental issues arose which required the holding of an oral hearing by the FSO.


The appellant complained to the FSO that an investment in Northern Irish property (the Fund) carried out through stockbrokers (the Broker) was inappropriate given her risk profile, and also claimed that representations had been made to her that the Fund would invest in commercial property only when in fact approximately 70% of the Fund was invested in residential property. The appellant also alleged that unbeknownst to her the fund was highly leveraged and therefore the risk of loss of capital was greatly increased.

The FSO in his finding stated that he was satisfied that there was no conflict of fact such as would require the holding of an oral hearing and that he could reach a finding without an oral hearing.


Seasoned and successful investor 

The Broker claimed that the appellant had described herself as a “seasoned” and “successful” investor and, had made the decision to invest following discussions with a “trusted source” and, having rejected a suggestion that she might consider a diversified range of investments with a view to spreading the risk. Much of this was based on oral discussions between the plaintiff and the Broker and it was claimed by the Broker that this was allegedly borne out by some significantly sized transactions conducted by the appellant through the Broker in 2005.

In his finding, the FSO concluded that these transactions did not accord with the description of her as a “seasoned investor”.  However, he made no finding as to whether the appellant had in fact, described herself as a “seasoned” and “successful” investor (a fact which was denied by the appellant).

The judge held that this material factual dispute could not be determined by reference to the documents as there was no record of her having made any of these statements in the notes of meetings or recorded telephone conversations.

Commercial Property 

With regard to the allegation that oral representations had been made by the Broker to the effect that the Fund would be investing in commercial property only the judge found that the FSO was faced with a clear conflict of material fact as to what had been said during these discussions.

The court also found that the FSO did not consider properly or at all the appellant’s complaint that the impugned investments in residential property did not come within the category of proposed development opportunities. The judge found that there was a strong prima facie case that the finding of the FSO on this point was vitiated by serious and significant error.


The Broker argued that the appellant had been sent extensive and detailed information regarding the investment, which included warnings as to the risks involved. 

However, the judge was of the view that the documents did not provide an answer to the question as to why the Broker believed it was appropriate for the appellant to invest all her funds in the Fund, which they identified to be a high risk investment, when they themselves recorded that the appellant’s need was for a moderate risk portfolio. 

The FSO concluded that a moderate level of risk was the appellant’s “original intention”. The judge found that it was an error of principle on the part of the FSO to have assumed that the appellant must simply have changed her mind about the degree of risk she was prepared to accept. There was a very serious and material conflict evident on the face of the documents before the respondent and consequently fair procedures clearly required that the respondent should have heard oral testimony from the appellant and the Broker before reaching that conclusion.


With regard to the appellant's claim about leverage the court found that the FSO's finding was so terse and so undirected to the gravamen of the claim that the appellant was left entirely uncertain as to whether this significant aspect of her complaint was investigated, either properly or at all, by the FSO or what his reasons were for rejecting this aspect of her complaint.


The court pointed out that the appeal provided for under the legislation was not intended to take the form of a re-examination of the merits of the decision and that an appellant would have to establish that as a matter of probability, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors. The court stressed that it was not making any finding whatsoever on the merits or otherwise of the appellant’s complaints.

In the circumstances, the judge found that it was not rationally or reasonably open to the respondent to conclude that an oral hearing was not necessary. He was satisfied that the FSO erred in principle in failing to exercise his discretion to hear oral testimony from the appellant and the Broker on the material disputes of fact and this failure amounted to a serious procedural irregularity which vitiated the finding of the FSO in this respect. Accordingly the finding of the FSO was set aside and the matter remitted to the FSO for review in accordance with the judgment.