The High Court has confirmed, in the recent case of Caledonian Life v Financial Services Ombudsman, that an appeal against a finding of the Financial Services Ombudsman (the “FSO”) is not a de novo hearing of the original complaint but rather a review of the FSO’s decision making procedure. By contrast to the earlier Davy v Enfield Credit Union judgment, the Court largely affirmed the decision making process used by the FSO in hearing the complaint against Caledonian Life.

The complainant and his broker had taken out a life assurance policy with Caledonian Life. On the death of his brother the complainant sought to claim under the policy, whereupon Caledonian Life informed him that the policy had been cancelled. Caledonian Life argued that it had received a written request to cancel the policy (although it had not retained a record of the cancellation letter it relied on).

The FSO was critical of Caledonian Life for only communicating with, and returning the premium cheque to one of the policy holders (ie the complainant’s late brother) and awarded the complainant €30,000. In making the award, the FSO took into account the complainant’s failure to notice that instalments had not been debited from his bank account by direct debit as arranged and thereby not realising that the policy had been cancelled. The FSO also criticised Caledonian Life for not maintaining documents relating to the file for a statutory minimum of six years.

Section 57CL of the Central Bank and Financial Services Authority of Ireland Act 2004 provides either party with a right of appeal to the High Court against a finding of the FSO within 21 days of the finding or such further period as the High Court may allow. The High Court has a broad discretion in terms of the orders it can make in such an appeal.

The Court confirmed that an appeal of an FSO decision is not a re-hearing of the complaint but is an examination of whether the appellant can establish that, taking the process as a whole, the decision reached by the FSO was weakened by a serious and significant error or a series of errors. In applying the test the Court will consider the degree of expertise and specialist knowledge of the FSO.

The Court found that the FSO was not engaged in resolving a contract law dispute in the manner in which a court would, was not required to have the same regard to technicality or legal form and must be given appropriate latitude to give proper force and effect to its broad ranging powers set out in the 2004 Act.

Finally, the 2004 Act requires the FSO to attempt to deal with each complaint through mediation, however, the High Court confirmed that mediation need only be embarked upon where it carried a reasonable prospect of achieving results and the courts should be reluctant to interfere with the FSO’s discretion in this regard.

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