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This item is probably one of the most significant items that I have ever written about consumer rights, something I am passionate about. It will be worth cutting and pasting into a secure file as a reference point in the future should you or anyone you know experience problems. The case I am about to refer to is to do with pension advice provided by a financial advisor but according to Greg Standing, partner in Wragge & Co LLP’s Finance, Insolvency, Recoveries and Sales Team, the Court of Appeal ruling has far reaching affects and is certainly one of the most significant legal rulings I have heard. If consumers have a complaint that cannot be resolved to their satisfaction by the company or organisation complained of they have the right to complain to the Financial Ombudsman Service (FOS) under the Financial Services and Markets Act 2000. This is voluntary for the consumer but is compulsory for the body complained about (up to £100,000). Now here is the important part, Section 228(2) provides that a complaint has to be determined by reference to what is, in the opinion of the Ombudsman, fair and reasonable in all the circumstances of the case, taking into account the relevant law, regulator’s rules and guidance and good industry practice. The Court of Appeal case of R (on the application of Heather Moor & Edgecomb Ltd) v Financial Ombudsman & Lodge confirmed that the Financial Ombudsman’s opinion as to what is fair and reasonable in all the circumstances of the case outweighs the relevant law. Yes you read that correctly, if the Ombudsman feels that his opinion is stronger than the legal direction he can set aside the legal direction and rule against it. Mr Lodge complained to the FOS about pension advice provided to him by independent financial advisers, Heather Moore & Edgecomb Ltd (HME). The ombudsman upheld the complaint. HME sought judicial review on the basis that the Ombudsman had failed to determine the complaint in accordance with the rules of English law. As a result, they argued, the decision of the Ombudsman was one that no reasonable Ombudsman could have reached. The Court of Appeal disagreed. The provision in the Act of the words “by reference to what is, in the opinion of the Ombudsman fair and reasonable in all the circumstances of the case” made it clear that parliament had not intended the Ombudsman to be bound to determine the complaint in accordance with the common law. The Ombudsman should take the relevant law into account, but was free to depart from it and be subjective in arriving at his decision. The court found that the Ombudsman had not, in any event, departed from the relevant law. Greg Standing comments on this result, The scheme applies to most financial matters and allows the Ombudsman to look beyond the law and the small print, to take into account good industry practice and to adopt a fair and modern approach. Although not bound by the common law,  any perversity, irrationality and arbitrariness on the part of the Ombudsman, including an unreasoned and unjustified failure to treat all cases alike, will be grounds to seek judicial review. The Ombudsman’s subjective decision making should perhaps be borne in mind when attempting to resolve consumers’ complaints in advance of the Ombudsman becoming involved. The interesting thing here, and please remember that I’m not a lawyer, is the comment made by Greg “The scheme applies to most financial matters” and the Financial Ombudsman Service is there to help to settle disputes over most types of finance including credit cards and car finance, so does this mean that the same rules apply in all cases in which the FOS is involved? If the answer is as I suspect, yes, this could have some far reaching effects! By Graham Hill