The High Court recently upheld a decision of the Financial Services Ombudsman (the “FSO”) in relation to a complaint against Bloxham Stockbrokers, who were a notice party to the appeal brought by the complainant, John Caffrey. Mr Justice Hedigan held that there was no basis on which to overturn the FSO’s finding that the complaint was not substantiated.

It is important to note that an appeal against a finding of the FSO is not a de novo hearing of the original complaint but rather a review of the FSO’s decision making procedure.  Appeals under section 57CL of the Central Bank Act 1942 as amended are not intended to take the form of a re-examination from the beginning of the merits of the decision appealed. The appellant must establish that as a matter of probability the FSO’s decision was vitiated by a serious and significant error. In this instance, the Court largely based its decision on whether the FSO’s determination that an oral appeal was unnecessary was a such a serious and significant error, and concluded that it was not.

It is interesting to note that in another recent High Court decision, Gabriel v. Financial Services Ombudsman, where the decision under the appeal pursuant to section 52CL involved an element of statutory interpretation by the FSO, the High Court clarified that while the onus remains on an appellant to show error affecting the outcome of a decision, and while the courts can show considerable deference to fact based decisions of specialised bodies such as the FSO, no such deference can be shown by the courts in respect of decisions involving statutory interpretation.


The appellant, Mr Caffrey, had purchased a bond from Bloxham Stockbrokers in or around March 2005. The appellant was an existing client of Bloxham’s at the time and had become aware of the bond, described as the Dresdner Bond, having received Bloxham’s Quarterly Newsletter. The appellant claimed that he was given the impression during a telephone conversation with an employee of Bloxham that Dresdner Bank AG guaranteed the return of the monies invested. He claimed he was not informed that the bond was in fact notes issued by Saturn Investments Europe plc, that the investment was linked to a US dollar currency bond, or that there was a swap agreement in place with Morgan Stanley. Bloxham denied these allegations, claiming that it had explained the nature of the bond to the appellant and that total loss was possible, but unlikely.

In June 2009, Morgan Stanley terminated the Swap Agreement with Saturn and the appellant was advised by Bloxham that he would only receive €0.3 per €1 originally invested. The appellant had invested €50,000 in the bond. The appellant subsequently submitted a complaint to the FSO complaining that at no time was the true nature of the bond and its inherent risk  explained to him.

The FSO investigated the complaint and concluded that the appellant was an experienced investor and that the investment was sold by Bloxham to him in good faith. The FSO was satisfied that Bloxham had reasonably considered that the investment was relatively secure and that the appellant was advised of and knew the possibility of fluctuation in the value of the investment. The FSO did not perceive the likelihood of any causal link between any fault on the part of Bloxham, and the loss sustained by the appellant and in the overall circumstances did not consider it just to fix Bloxham with responsibility for the loss.

Mr. Caffrey appealed the FSO’s decision to the High Court pursuant to section 57CL of the Central Bank Act 1942, as inserted by section 16 of the Central Bank and Financial Services Authority of Ireland Act 2004. The appellant sought to challenge the FSO’s finding on the basis that the FSO erred in law and in fact so that his decision was vitiated by a serious and significant error, by accepting the evidence of Bloxham in relation to the information allegedly given to the appellant at the point of sale, in finding that Bloxham had not misrepresented the nature of the investment, and by attaching too much weight to the contention that the appellant had significant investment experience. In addition, the appellant submitted that the conflicting evidence surrounding the information provided to him at the point of sale made it imperative that the FSO investigate the conflict by oral hearing.


Hedigan J considered the test laid down in Ulster Bank v. Financial Services Ombudsman (2006), “the plaintiff must establish as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors” and whether the FSO’s decision in this case was vitiated by a serious and significant error because the dispute between the parties made it imperative that the FSO investigate the conflict by way of oral hearing, which he failed to do.

The Court noted that it is clear the FSO enjoys a broad discretion as to whether or not to hold an oral hearing and considered it doubtful that the parties would have been in a position to give an accurate and detailed description as to the contents of a short telephone conversation which occurred five years previously. The Court was satisfied that it was reasonable for the FSO to determine that an oral hearing was unnecessary, taking into account the fact that an oral hearing was not requested, and held that this decision was within his jurisdiction.

An issue was raised during the appeal as to whether the FSO should have made an order requiring Bloxham to produce a recording of the disputed telephone conversation. The Court found that it was clear that no such tape recording existed and in the circumstances it would have been futile for the FSO to make a production order in this case.

With regard to the appellant’s investment experience, the Court noted that to describe the appellant as a sophisticated investor would be to attribute a high level of expertise in financial instruments to the appellant, however, the FSO did not describe the appellant as a sophisticated investor. The Court found that the actual description used by the FSO, that of an “experienced investor” was a very different thing and that it was reasonable for the FSO to conclude that based on the length of time the appellant was a client of Bloxham and the type of accounts that he held, that he was an experienced investor and the FSO was entitled to weigh this in the balance in making his decision.

Consequently, the Court was not satisfied that there was not a sufficient basis for the Court to intervene in the decision made by the Ombudsman and refused the appeal.  The FSO was also awarded his costs of the appeal.