Key Points:

  • Where a decision-maker may fairly and reasonably decide a case on the basis of the parties' written submissions, an oral hearing is not necessarily required.
  • A legislative policy of providing a mechanism such as the Financial Ombudsman Service (FOS) to resolve disputes quickly and with a minimum of formality is not inappropriate in the context of the protection of consumers in the domain of financial services and investment advice.
  • The FOS procedure provided sufficient opportunity for the applicant to know the reasons for the FOS's decision and respond to it and so, in this case, it could not be said that the final decision or the manner in which the Ombudsman dealt with the complaint were unforeseeable and therefore contrary to the rule of law.

Background

In late 2003, Mr L complained to FOS about pensions advice given by his financial adviser, HME. Following an investigation, a FOS adjudicator recommended that HME should carry out a loss assessment and make redress. HME rejected the adjudicator's recommendation and requested an oral hearing, arguing that Article 6 ECHR was engaged and a hearing was needed because there were disputed facts and witnesses would need to be cross-examined. The request for a hearing was dismissed and the Ombudsman subsequently issued his final decision, upholding the adjudicator's recommendation.

HME unsuccessfully judicially reviewed the Ombudsman's decision in the Administrative Court and the Court of Appeal . Having been refused permission to appeal to the House of Lords, it made an application to the ECtHR arguing that Article 6 ECHR had been violated. HME's complaints were that FOS wrongly refused to hold an oral hearing and had failed to deliver its decision publicly. It also complained that the FOS itself was neither independent nor impartial and that the complaints system was not compatible with the rule of law.

On 14 June 2011, the ECtHR rejected HME's complaints as "manifestly ill-founded". The ECtHR's decision provides insight into the factors that the Court considers in determining whether a decision-maker is required to hold an oral hearing in order to comply with Article 6 ECHR.

Article 6 ECHR and the need for a hearing

Article 6 provides that "in the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly…"

The ECtHR agreed with the conclusion of the Ombudsman and the Court of Appeal that an oral hearing was not necessary in this case to make the decision Article 6 compliant. The Court reiterated that where a decision-maker may fairly and reasonably decide a case on the basis of the parties' written submissions, an oral hearing is not necessarily required.

In this case, the Court considered that the Ombudsman could fairly and reasonably decide the case without an oral hearing because:

  • HME was afforded ample opportunity to present its case and to know and respond to the arguments put forward by Mr L and to make final representations on the basis of the Ombudsman's provisional decision. 
  • The Ombudsman had considered HME's requests for an oral hearing at each stage but determined that the contemporaneous written evidence provided a sufficient factual basis for determining the complaint as there was no contradiction in it.  
  • A legislative policy of providing a mechanism such as the FOS to resolve disputes quickly and with a minimum of formality is not inappropriate in the context of the protection of consumers in the domain of financial services and investment advice.  
  • In any event, the existence of the FOS did not preclude access to an oral hearing in the courts either by the original complainant or by a firm dissatisfied with a decision, as evidenced by HME's three day hearing in the Court of Appeal.  
  • Although the proceedings were of considerable significance for the applicant, this was not necessarily decisive.   

Public judgment

The applicant complained that, in keeping with the general practice of FOS, the Ombudsman’s decision was not made public, which violated Article 6. The ECtHR ultimately agreed with the Court of Appeal that account must be taken of the entirety of the domestic proceedings and the purpose of ensuring public scrutiny of FOS's decisions was satisfied by the availability of the judicial review proceedings in which the disputed decision was published.

The FOS process and the rule of law

As the applicant's complaint that the FOS was neither independent nor impartial had not been raised before the Court of Appeal, the ECtHR rejected this complaint on the basis that domestic remedies had not been exhausted (Article 35 ECHR).

The applicant also complained about the legal basis of the Ombudsman's decision. Specifically, he argued that the nature of the Ombudsman's "fair and reasonable" jurisdiction in section 228(2) of FSMA means that his decisions are not foreseeable, contrary to the rule of law. This is because the Ombudsman is not required to make decisions in accordance with English law – he must only base his decisions on what he deems to be fair and reasonable in the circumstances of the case. The applicant argued that as neither the Ombudsman's decisions nor criteria for decision-making were publicly available, the information that FOS published was insufficient to enable firms to know how a particular case would be decided.

The ECtHR rejected this argument. It held that "the scope of the Ombudsman’s discretion is not so broad as to automatically contravene the principle of foreseeability" and that it could detect "no sign of any arbitrariness in the decision of the Ombudsman". The ECtHR's view was that the FOS procedure provided sufficient opportunity for the applicant to know the details of the complaint and to respond both to it and to the provisional decision of the Ombudsman. On this basis, the ECtHR's view was that it could not be said that the final decision or the manner in which the Ombudsman dealt with the complaint were unforeseeable.

Comment

This case is a further example of the ECtHR's approach to determining whether an oral hearing may be required in order for a decision-making process to comply with Article 6 ECHR. The judgment is also interesting because it reinforces that arguments about Article 6 compliance are highly fact-specific. In this case, the ECtHR determined that Article 6 had not been breached because the Ombudsman had explained in detail the reasons for its decision to uphold the complaint and allowed HME a sufficient opportunity to respond. In this way, it can be seen that the ECtHR did not endorse the FOS process itself as Article 6 compliant (although it noted that the process was "not inappropriate" nor so broad as to automatically contravene the principle of forseeability) but rather considered exactly what steps were followed by the FOS in the circumstances of HME's particular case, noted the availability of judicial review and made its decision on this basis. This approach can be seen as analogous to the English court's case-by-case approach when considering issues of fairness.

Heather Moor & Edgecomb Ltd v United Kingdom 1550/09 [2011] ECHR 1019