Financial services complaints body wins years-long court battle against chief ombudsman

FSCL – an independent statutory adjudicator of complaints between consumers and 7,000 market participants such as financial advisers, insurers, non-bank lenders and finance companies, mortgage brokers, insurance brokers, trustees and fund managers – had filed for judicial review of a decision by the chief ombudsman to refuse its request to use the term in its name, in a similar fashion to the Banking Ombudsman Scheme and the Insurance and Savings Ombudsman Scheme.

Since 1991 it has been illegal for anyone to call themselves an ombudsman without the chief ombudsman’s permission.

The saga began in 2015 when FSCL applied to then Chief Ombudsman Dame Beverley Wakem, but was knocked back. It tried again the following year with a new chief ombudsman, Peter Boshier, in the chair but got the same result.

Court action followed; the Court of Appeal directing Boshier to reconsider. He did – and again refused the application. Back in the High Court again, a judge set aside the chief ombudsman’s decision on grounds it was pre-determined and ruled the matter was to be reconsidered by a temporary ombudsman appointed specifically for that purpose.

FSCL appealed, saying the High Court judge had erred by not making the decision herself. It also argued that the chief ombudsman had failed to treat FSCL the same as its competitors which, it said, was an unjustifiable limit on its right to freedom of expression, protected by s 14 of the Bill of Rights Act 1990.

The chief ombudsman argued he was concerned about the overuse of the “ombudsman” moniker by the private sector and the potential for confusion and the undermining of public confidence in the parliamentary ombudsman’s office.

He also said the Banking Ombudsman and the Insurance and Savings Ombudsman were in a different category as they were established in an unregulated market. FSCL was not in the same position as its activities were approved under the Financial Services Providers (Regulation and Dispute Resolution) Act 2008.

FSCL said it had fulfilled all the criteria set down by the ombudsman’s office for private organisations wanting to use the “ombudsman” name. Therefore, the only lawful decision by the chief ombudsman was to approve its application.

The Court of Appeal sided with FSCL, saying there was no objective, reliable basis for the chief ombudsman’s final decision. The facts he relied on to demonstrate a genuine risk of confusion in the public mind, leading to a lessening of confidence, “do not support the conclusion”, the court said.

The risk to the chief ombudsman’s role and status was negligible and his decision was an unreasonable limit on FSCL’s right to freedom of expression.

Comments from our readers

On 16 June 2022 at 12:41 pm Amused said:

Curious that a “not for profit” organisation like FSCL has pursued use of the term “ombudsman” in its name so zealously.

FSCL said last year that it’s continued efforts to use the title of Ombudsman were to do with “improving consumers’ access to justice.”

Can we please drop the pretext that this was ever about the consumer.

On 16 June 2022 at 12:41 pm Murray Weatherston said:

Congratulations to the Board and CEO Susan Taylor. Your persistence has finally paid off.
I hope CA awarded plenty of costs against the Chief Ombudsmen for their anti-competitive behaviour.

On 16 June 2022 at 2:58 pm Dirty Harry said:

They might use that term.
I still won't use them.

In fact, I've never seen a good enough reason for why there are 4 DRSs in the first place.

On 16 June 2022 at 2:58 pm Dirty Harry said:

They might use that term.
I still won't use them.

In fact, I've never seen a good enough reason for why there are 4 DRSs in the first place.

On 17 June 2022 at 12:18 pm Murray Weatherston said:

The reason that there are 4 EDRS schemes is because the law allows it - ie the law does not say that there shall be a single DRS.
The fact that all 4 schemes continue to exist sustainably shows that the market works. Otherwise one or more scheme would have lost members to others and/or the public would be outraged that one or more schemes was making soft decisions in favour of advisers.
Its only in government and the bureaucracy that the mantra is "if it ain't broke, regulate!"

On 21 June 2022 at 9:45 am Mr Slater said:

As the aim is to not confuse consumers and as there is already a Financial Services Ombudsman, I wonder what name FSCL will now give itself? Perhaps it could run a competition for its members to see what they think it should be called?

On 21 June 2022 at 2:33 pm Murray Weatherston said:

Isn't Karen Stevens the Insurance & Financial Services Ombudsman (IFSO).
Who really cares what name FSCL comes up with for their Ombudsman?

On 22 June 2022 at 1:59 pm Murray Weatherston said:

Re Dirty harry's comment about 4 DRS.

I've just had occasion to look at the 2021 Annual report of the Banking Ombudsman.

Looks like they have only 19 members - 17 banks, a building society and a credit union.

Of the 116 disputes found to be in jurisdiction, customers won outright 12 times , the member won outright 65 times and the result a partial win for both parties was 39 times.

BOS is not a DRS with a large number of members.

On 23 June 2022 at 12:49 pm Dirty Harry said:

Still yet to see a good reason for BoS + 3

because "the law allows it", is not one.
Why does it?
Why on earth should there be a "competitive market" for us to choose a DRS? On what basis should they compete? I assume the intent was price - to be as low cost and efficient as possible.
That's well and good. But what if they compete on being "the best to deal with" (soft) for advisers?
What if they discover their assumptions in their business plans are incorrect and they go out and seek to "educate" consumers about their rights - AKA soliciting complaints.
What if they decide the name thing is really important for branding/competing and end up spending megabucks in pursuit of that?
And we end up with a situation akin to driving around Napier looking for a supermarket.

At the very least three sets of management and compliance is never as efficient as one. The fact the the 3 exist and pay all their bills doesn't prove to me that the market works, it proves the whole DRS thing costs far too much to run.

I would rather one scheme, run as a non-profit, with suitable people running it for the interests of all.

Financial services complaints body wins years-long court battle against chief ombudsman

After a seven-year battle and two trips to the Court of Appeal, Financial Services Complaints Ltd (FSCL) has won the right to use the term “ombudsman” in its name.

Thursday, June 16th 2022, 9:20AM 9 Comments

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