The High Court has dismissed an application for judicial review of a FOS decision where the Ombudsman rejected a PPI complaint on causation grounds. The decision highlights that the FOS may uphold firms’ rejections of mis-selling complaints where the firm can show that the claimant would have purchased the financial product in any event.


Mrs Critchley successfully applied for a credit card from Halifax in 2002. At the same time, she was sold a PPI policy. Mrs Critchley used the credit card but never made a claim under the PPI policy. She cancelled both the card and the policy in 2006. In 2017 she made a complaint to the bank that the PPI had been mis-sold to her. The bank rejected the complaint and Mrs Critchley brought a complaint to the FOS.

The complaint was initially assessed by an adjudicator and then referred to an Ombudsman when Mrs Critchley did not accept the adjudicator’s decision that the policy had not been mis-sold. The Ombudsman found that the bank had not acted fairly and reasonably in its dealings with Mrs Critchley, had not advised her with reasonable skill and care, had not taken sufficient steps to establish whether the policy was suitable and had not provided Mrs Critchley with sufficient information to allow her to make an informed choice about whether to take out the policy. Nevertheless, the Ombudsman concluded that, even if the policy had not been mis-sold, it was more likely than not that Mrs Critchley would still have bought the PPI policy. Accordingly, the Ombudsman rejected the complaint.

Mrs Critchley applied for judicial review of the Ombudsman’s decision.

High Court decision


It was common ground that the Ombudsman was required to “take into account” the FCA’s guidance to firms handling PPI complaints set out in Appendix 3 to the Dispute Resolution: Complaints section of the FCA’s handbook (DISP App 3). DISP App 3 sets out that a firm should presume that a complainant would not have bought the PPI contract if the sale was “substantially flawed”. The presumption can, however, be rebutted if evidence to the contrary can be shown.

Mrs Justice Lang found that the Ombudsman had not misinterpreted DISP App 3. He had referred to the guidance fully in his decision and, although he had identified significant failings in the sale of the policy, concluding that it had been “substantially flawed”, he had gone on to find that there was evidence to rebut the presumption that Mrs Critchley would not have bought the policy if those failings had not occurred, taking into account Mrs Critchley’s “demands, needs and intentions” at the time of the sale.


Although the Ombudsman had also found that the bank had not exercised reasonable skill and care when selling the PPI policy to Mrs Critchley, he had concluded that it had nevertheless been suitable. Mrs Critchley had met the eligibility criteria for the policy, she had had a need for a policy, on balance it was affordable for her, the policy exclusions and limitations had not made the policy unsuitable and it had provided useful cover given Mrs Critchley’s circumstances.

Lang J rejected Mrs Critchley’s argument that eligibility was not relevant to the question of suitability, noting that eligibility is “plainly” relevant: if an individual is not eligible to claim then the terms of a policy will be unsuitable for that individual. Further, the judge found that the Ombudsman had not failed to take into account the limitations of the cover, the high cost and poor value of the policy, and the benefits. The judge found that “on a fair reading of the decision as a whole”, the Ombudsman had taken those considerations into account when concluding that the policy had been suitable. That had been a rational conclusion by the Ombudsman exercising his judgment.


Lang J found that the Ombudsman had taken into account all relevant considerations to Mrs Critchley’s purchase of the PPI policy when deciding that, even if the policy had not been mis-sold, Mrs Critchley would have been more likely than not to have taken out the policy in any event. The decision showed clearly that the Ombudsman had had regard to the materiality of the flaws in the policy and the sale. His decision could not be characterised as irrational. Irrationality was the basis to challenge a FOS decision.

The Ombudsman, and the court, gave little weight to Mrs Critchley’s evidence that she would not have wanted the policy if its terms had been fully explained to her. Her recollection of the sale, which had taken place in 2002, was poor and she had already forgotten about a meeting with the bank. Lang J found that the Ombudsman had been entitled to take the view that Mrs Critchley’s submission on the issue in her statement of case had been included on the advice of the claims management company representing her and was similar to representations made in other complaints where the CMC was the representative.


The hurdle for succeeding in judicial review proceedings is high and the courts will be slow to overrule decisions of the FOS unless it can clearly be shown that a decision is irrational or perverse. The FOS is entitled to reach its decisions based on what is “fair and reasonable in all the circumstances of the case”. In the context of PPI complaints, that may include relying on software systems such as ‘Navigator’ to assess merits, an issue that may be revisited by the courts in another case. The courts will not, however, substitute their own views of what is fair and reasonable for those of an Ombudsman.

This case was noteworthy because the FOS rejected the complaint on causation grounds – something it rarely does. The Ombudsman had considered the evidence, taken into account the relevant law and regulatory rules, and exercised his judgment. The decision had set out clear reasons for the Ombudsman’s conclusions and the court declined to interfere in the decision making process. Beyond PPI complaints, the case highlights the discretion the FOS has, but that it should set out in its decisions how it has assessed complaints bearing in mind the various factors it must take into account under the DISP rules. The FOS may place reliance on tools designed to assess complaints and more, or less, reliance on the parties’ own evidence.

Further reading: R (on the application of Critchley) v Financial Ombudsman Service Ltd [2019] EWHC 3036 (Admin).