The Financial Services Ombudsman had made a direction that financial advisers, having given unsuitable advice to the applicants, should in one case carry out a loss assessment and make redress of any loss shown, and in the other pay whatever shortfall had been suffered. In both cases, the financial advisers were only willing to make payment of £100,000 although the loss assessments showed losses in excess of £100,000 had been suffered. The applicants applied, under the Financial Services and Markets Act 2000 s229, for injunctions to enforce the Ombudsman’s directions. The financial advisors contended that the Ombudsman had no power to make a direction that required them to pay money to the applicants, or if he did, it was limited to payment of £100,000 (the statutory cap).
The court held that if a determination by the Ombudsman required the payment of money to an individual, it was a money award, even if unquantified at the time of the award. The Ombudsman could not have the power to make a direction that would require a payment to be made that would exceed the statutory cap. If the cost of compliance with a direction was unknown at the time the direction was made, it was subject to an implied limitation that it would not be enforceable beyond the statutory cap, once reached. The Ombudsman had exceeded his powers and the court could not exercise its discretion to enforce an invalid direction by way of injunction.
Bunney v Burns Anderson Plc and Financial Ombudsman Service Ltd: Cahill v Timothy James & Partners Ltd