Out-Law / Your Daily Need-To-Know

The Financial Ombudsman Service had not breached Article 6 of the European Convention on Human Rights by refusing a firm's application for an oral hearing.

Heather Moor & Edgecomb Ltd against the United Kingdom

  • [2011] Application no. 1550/09 ECHR

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In 2003 Mr Lodge complained to the FOS about advice he was given in 1999 by an independent financial adviser (IFA) to transfer out of his British Airways pension scheme and invest in a personal pension plan.

He claimed that the advice failed to take into account all his circumstances. He was 55 but his wife was significantly younger and they had two young children. Moreover, the assumed growth rate of 9% per annum was not achieved.

The ombudsman rejected the IFA's repeated requests for an oral hearing on the grounds that the facts of the case were not in dispute.

On the documentary evidence, he was satisfied that good industry practice in 1999 would have been to recommend against transfer. The factors the IFA took into account did not include the large age difference between Mr and Mrs Lodge and the need to secure equivalent spouse's benefits. And the 9% assumed annual growth rate was "anything but modest".

In reaching this decision, the ombudsman stated "while I have taken into account the relevant law, I have determined this complaint based on what, in my opinion, is fair and reasonable bearing in mind all the circumstances of this case".

The IFA applied for judicial review, arguing that the FOS was obliged to determine complaints in accordance with English law and that failure to do so was an infringement of the European Convention on Human Rights. The IFA had advised in accordance with good practice at the time and was therefore not negligent under the law.

In addition, the ombudsman should have held an oral hearing in public and he should have given his decision in public but wrongfully refused to do so.

Court of Appeal

The initial application for judicial review was rejected but permission was given to appeal to the Court of Appeal.

After a three-day hearing, the Court refused the application (see R v FOS). The ombudsman had decided the case on the basis of what was fair and reasonable in the circumstances, taking into account relevant law, regulations and industry practice in accordance with section 228 of the Financial Services and Markets Act 2000 and the FOS scheme rules (set out in the DISP section of the FSA Handbook).

The Appeal judges were satisfied that the FOS scheme did not breach the right to a fair trial under the European Convention. The ombudsman was free to depart from the relevant law, as long as he said so in his decision and explained why.

The scheme rules did not prevent him from hearing cases in public or pronouncing his decision in public. But there was no issue in this case that made a public hearing necessary and there had been no unfairness in the ombudsman's decision to decide the matter on written evidence. The decision had been made public by the proceedings before the Court of Appeal and the availability of the judicial review procedure meant there was no breach of the Convention.

The IFA took the case to the European Court of Human Rights (ECHR), arguing that the decision breached its right to a fair trial under Article 6 of the European Convention because the FOS had failed to deliver its decision publicly and had refused to hold an oral hearing. It also claimed that the FOS was neither independent nor impartial and that the complaints system was not compatible with the rule of law.

The European Court of Human Rights

The ECHR dismissed the application. An oral hearing is not an absolute obligation. In this case the relevant issues of fact and law could be adequately addressed in, and decided on the basis of, written submissions.

A decision based on written evidence did not preclude access to the court because it was open to the complainant to issue legal proceedings against the firm or for the firm to seek judicial review.

In this case, the FOS said it considered a hearing unnecessary because the contemporaneous written evidence provided a sufficient factual basis for determining the complaint. The Court of Appeal agreed, and so did the ECHR.

The IFA had been afforded ample opportunities to present its case, to know and respond to the arguments put forward by the complainant and to make final representations on the basis of the FOS' provisional decision.

As for the complaint that the FOS decision had not been made public, the ECHR could see no compelling reason to withhold the Ombudsman’s decision from publication. In this case, however, the detailed Court of Appeal judgment, which quoted at length from the FOS decision, served the purpose.

The ECHR also concluded that the scope of the FOS discretion was not so broad as to automatically contravene the principle of foreseeability that is an integral part of the rule of law. In this case, the Ombudsman had explained in detail the basis for upholding the complaint. The IFA may not have agreed with it, but the ECHR detected no sign of any arbitrariness in the decision.

The ECHR could not determine the assertion that the FOS was not independent or impartial as the IFA had not raised this complaint before the Court of Appeal. Domestic remedies had therefore not been exhausted.


The judgment shows how decisions on alleged breaches of Article 6 are very case-specific. But the wider question whether or not the FOS should publish its decisions is not new.

Before the ECHR, the Government explained how the FOS makes considerable efforts to inform firms about how it deals with complaints by publishing case studies, fact sheets and technical briefings. It maintained these were more effective than publishing thousands of anonymised decisions.

As part of its plan for financial regulation reform, however, it intends to make provision to allow the FOS to publish its decisions "if it considers it appropriate to do so". The FOS will be expected to consult on the principles it would apply to the publication of determinations.

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