The Court of Appeal has today handed down its decision in Clark v In Focus Asset Management [2014] EWCA Civ 118, overturning the High Court's decision of over a year ago that allowed complainants to pursue the same claim for additional compensation in the Courts.

The High Court's decision

The High Court's decision (click here for further details) caused much controversy and created ambiguity in respect of the effect of a binding award, given by an Ombudsman and accepted by a complainant, for damages arising out of a FOS complaint. The Court held that a complainant should not be precluded from pursuing the matter further in the Courts on the basis that the FOS was only a complaints service which did not deal with causes of action as such and did not need to apply the strict law when reaching its decision. A further consideration was that the complainant could ultimately choose whether to be bound by the decision which was not indicative of a formal tribunal process.

As a reminder, the statutory maximum that an Ombudsman can award by way of compensation is £150,000 (or £100,000 for complaints lodged pre-January 2012). Whilst the Ombudsman may make a recommendation that the firm pay a higher amount in compensation, the firm will not be obliged to do so.

The effect of this original decision was that a complainant with potential losses exceeding £150,000 could choose to accept the maximum monetary award and then bring a claim in the Courts for additional losses if the firm was not prepared (for whatever reason) to pay above this amount. Indeed, a complainant could if they so wished look to the Courts for additional redress in circumstances where they felt that the Ombudsman's award was too low: a potentially risky strategy given the costs which would be incurred but the monies awarded by the FOS could be used to fund the litigation.

To confuse matters further, this decision was in direct conflict with an earlier decision of the High Court in the case of Andrews v SBJ Benefit Consultants [2010] EWHC 2875 (Ch) in which the Court had held that the complainant's right to pursue a claim in the Courts would be extinguished if they accepted the FOS's decision. As such, the Court of Appeal's clarification of the legal position was widely anticipated.


The news that the Court of Appeal has overturned the High Court's decision in this case will be welcomed by financial services firms and their insurers alike. It was perceived that the FOS complaints process may not bring finality to a claim even after compensation had been paid. There was also a real risk that costs would be duplicated if the claim was subsequently pursued in the Courts, potentially funded by the FOS award which had been intended to compensate the complainant for their losses and bring an end to the matter.

The Court's findings therefore go some way towards redressing the balance of interests between financial services firms and consumers and the decision is fair as a complainant can always elect to reject the Ombudsman's award and seek recourse instead via the Courts.

This decision will of course only apply if the nature of the complaint is the same as the cause of action set out in any subsequent proceedings. There is nothing to prevent a claimant from pursuing a new cause of action against the same firm in the Courts and, should the situation arise, careful consideration should be given to whether there is any overlap between the claims made in the Court proceedings and the complaints previously made to the FOS.

There is potential for the case to be subject to a further appeal to House of Lords. However, the Court of Appeal judges were unanimous in their findings to overturn the High Court's decision which may make the prospect of further proceedings unlikely.