|IFADU is taking the regulator to
the European Court of Human Rights (ECtHR) piece by piece, an edited
version of our 'Instructions to Counsel' can be found HERE
(Word), for obvious reasons the full version will only be available when
we get to a stage where we must disclose it.
The argument about an appeals process to a truly independent body is only part of a much wider set of issues that MUST be addressed, I do realise that an appeals process is a double edged sword but the determinations currently being made by the FOS defy any logic, if they knew what they were doing we wouldn't have an argument, would we?
Human rights belong to individuals and incorporated bodies alike, every entity has legal rights that cannot be taken away.
The Financial Services and Markets Act 2000 (FSMA) is the piece of legislation that allows the Financial Services Authority (FSA), the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS) to behave they way they do, illegally. This piece of legislation is not compatible with the European Convention on Human Rights (ECHR), we believe that all domestic remedies have been constructed in a way that will not allow us to achieve our aims, many legal experts agree with us on this:
Anthony Speaight QC (Opinion predating N2)
Mr Speaight also said:
"There are growing concerns that the pendulum of consumer protection has swung too far in the case of the Financial Ombudsman Service and small independent financial advisers. The FOS appears regularly to be exercising its discretion to adjudicate upon claims against small IFAs up to its maximum theoretical jurisdiction of £100,000. There is rarely an oral hearing. And there are good reasons to believe that sometimes FOS makes substantial awards in cases which would be rejected by the courts. On other occasions compensation seems to be calculated in a more generous manner than a court would assess damages. By reason of very large excesses and other insurance shortcomings some such IFAs have no insurance which responds. There is no appeal on the merits.
Such a system would be tolerable if the maximum award were modest – say £5,000 (which is the maximum summary compensation under the legal professions’ schemes for "inadequate professional service"). It would also be tolerable if, as is the case with the summary system of adjudication in the construction industry under the Housing Grants Construction and Regeneration Act 1996, there could be a complete rehearing before a court. And it might even be tolerable if it were applied only against very large companies But an unappealable, compulsory, summary jurisdiction against small traders making awards as great as £100,000 is, in my view, both wrong in principle and producing injustice in practice."
Mr Justice Lightman on the Department of Constitutional Affairs website
Human Rights The European Convention on Human Rights requires that in the determination of civil rights a court or tribunal affords to the parties before it a fair trial before an impartial and independent tribunal. In respect of his judicial role the Ombudsman is clearly a tribunal within the meaning of Article 6. There are a number of questions raised whether these requirements are satisfied in respect of hearing before the Ombudsman.
1. Is he an "independent tribunal"? This turns upon the term of his appointment and the powers for his removal. In Findlay v UK (2nd January 1997) Reports of Judgments and Decisions 1997 (1997) 24 EHRR 221 ("Findlay"), 124 221 para 73, the principle is laid down:
"In order to establish whether a tribunal can be considered as 'independent' regard must be had inter alia to the manner of appointment of its members and their term of office, the existence of guarantees against outside pressures and the question of whether the body presents an appearance of independence." Until recently the Ombudsman could be removed at anytime by the Secretary of State for Social Security by notice in writing, but in order to secure compliance with the Convention he was in 1999 granted a fixed two year term of appointment.
2. Is he an impartial tribunal?
Findlay goes on to say in respect of impartiality:
"As to the question of impartiality there are two aspects to this requirement. First, the tribunal must be free of personal prejudice or bias. Secondly it must be impartial from an objective viewpoint, that is, it must offer sufficient guarantees to exclude any legitimate doubt in that respect."
The question of an impartial tribunal and the question of a fair trial can conveniently be considered together. Concern on this score may be expressed on a number of grounds:
(a) the Ombudsman combines investigatory and judicial roles. It is not unusual on the Continent for an investigating judge to fulfil both roles and for this reason this situation could survive scrutiny in Strasbourg, but though his procedure may satisfy the "floor test" imposed by the European Court of Human Rights, that floor test does not impose the ceiling in national courts like those in the UK where the legal tradition adopts a much more rigorous standard;
(b) his staff investigate complaints as and when received, report to him on them and prepare draft decisions for his consideration and signature. This is inevitable in view of his very substantial workload and is (unfortunately) not infrequently apparent from the decisions themselves. This is very troubling. This procedure is perfectly normal for an administrative, but not for a judicial, body. For it means not merely that the adjudicator receives privately relevant material through and from his officials but the procedure is calculated to enable him to sign off decisions effectively made by his staff;
(c) since the decision of the Ombudsman is final on questions of fact, there is likely to be an entitlement to an oral hearing and the examination of witnesses. I understand that though he recognises the right to both the Ombudsman has had very few such hearings (in total not exceeding four). It is not apparent whether this is the result of informed decisions by the parties as to their entitlement in this respect. But in Wakelin v. Read  26 PBLR (22) Mummery LJ made clear it is for the parties to request an oral hearing for evidence and argument and that a heavy price may have to be paid if the request is not made. It is however proper and it may be incumbent on the Ombudsman to point out to litigants the existence of these rights if they are not aware of them, and this must surely be so in case of litigants in person. If the parties are fully informed of their rights and exercise them on any large scale, it must be obvious that it would not be practicable for the Ombudsman to conduct any substantial number of such hearings, let alone "in public", having regard to the calls on his time and his limited staff and facilities;
(d) in cases where on grounds of entitlement to a fair trial a party in proceedings before the Ombudsman is entitled to object to a hearing before the Ombudsman, there is no alternate before whom the matter may proceed, resulting in a failure of the legal system to comply with its duties under the European Convention. I shall say more about this in a moment;
(e) section 151(4) of the 1993 Act confers upon the Ombudsman the extraordinary role of appellant against decisions of the High Court. The Court of Appeal in Edge v. Pensions Ombudsman  3 WLR 79  49 PBLR (36) at 116 pointed out the incongruity:
"... it is surprising to find a tribunal appealing from the decision of the High Court overturning its own determination. It is important that the Ombudsman should avoid being seen to be partisan and there is a danger that by appealing on behalf of complainants he may become too closely involved with them. In our view the Ombudsman must consider carefully whether there is some proper reason why the performance of the statutory role given to him under Part X of the Act of 1993 requires that he should challenge a decision of the high Court given on appeal under section 151(4) of that Act. Unless there is some point of principle in relation to which conflicting decisions of the High Court make it difficult for him to perform his proper functions without further guidance from this court, it is difficult to see why he should not accept and act upon the decisions of that court - to which Parliament has entrusted the task of hearing appeals for his determination."
In Duckitt the Court of Appeal reaffirmed this rule, stating that the point of principle must be real, and not imaginary. But whatever the constraints so imposed, such a role is surely incompatible with his judicial function; (f) the Ombudsman clearly has his own evangelical agenda which he takes his every opportunity to take a high profile stance to propagate not least through his lectures and Annual reports. As is clear from the quotations from his statements which I have already made, he respects none of the constraints to be expected of a judicial officer respecting decisions made by superior courts, but conducts campaigns in furtherance of his ideas casting ridicule on those members of the judiciary who have the temerity to disagree with him. Respectfully I would venture the comment: few postures are so unbecoming as a judge whatever his level in the judicial hierarchy for ever in the missionary position. This must give him the appearance of being, if he is not thereby constituted, an interested party in his own decisions. The obviation of this cloud must be a further factor favouring transferring the adjudicatory role to a Tribunal.