Crossing the Legal Rubicon: The Battle for Control over Oral Hearings at the Financial Services Ombudsman Bureau

• Date: 01 January 2014
• Author: Peter Dunne

32

Crossing the Legal Rubicon: The Battle

for Control over Oral Hearings at the

Financial Services Ombudsman Bureau

PETER DUNNE

The Financial Services Ombudsman (hereinafter “the Ombudsman”) is

an independent, statutory ofcer who deals with unresolved complaints

brought by consumers in relation to their individual dealings with a

nancial services provider (hereinafter “FSP”).1 He is established under

Part VIIB of the Central Bank Act 1942 (as inserted by s.16 of the Central

Bank and Financial Services Authority Act 2004). The Ombudsman,

and the Bureau of the Financial Services Ombudsman (hereinafter “the

Bureau”), was set up in response to a perceived need to establish a more

concrete Ombudsman scheme, underpinned by statute, as part of an overall

enhanced regulatory framework for nancial services.2

In designing the Ombudsman, the Oireachtas showed a clear intention3

that the Bureau would operate in an “informal” and “expeditious”

manner.4 Under s.57BK(4) of the Act, the Ombudsman is enjoined to act

“without regard to technicality or legal form.”5 The Ombudsman is not an

extension of the judicial branch, nor a miniature version of the Commercial

Court.6 Rather, the Bureau is an independent ofce by which all consumers,

irrespective of resources or legal expertise, can seek a fair resolution to their

dispute with a FSP.

A Finding of the Ombudsman legally binds both a complainant and

a FSP,7 and a party who is unhappy with a decision of the Ombudsman

may appeal to the High Court.8 In recent years, dissatised parties have

1 http://www.nancialombudsman.ie/about-us/ [Accessed 8 July 2013]

2 Ibid [Accessed 8 July 2013], See Mary Donnelly, “The Financial Services Ombudsman:

Asking the ‘Existential Question’” (2012) 19 (1) Dublin University Law Journal 229

p.236

3 See Sam Collins, “When must the Financial Services Ombudsman hold an Oral

Hearing?” (2012) 11 Commercial Law Practitioner 219; Trevor Murphy, “A Review

of the Jurisdiction and Procedure of the Financial Services Ombudsman and Recent

Trends” (2013) 20 (5) Commercial Law Practitioner 102

4 Central Bank Act 1942 (as inserted by s.16 of the Central Bank and Financial Services

Authority Act 2004) (hereinafter “the Act”) s.57BB(c)

5 The Act, supra note 4, s.57BK(4)

6 Lyons v Financial Services Ombudsman [2011] IEHC 454, p.10 (hereinafter “Lyons”)

7 The Act, supra note 4, s.57CI(9)

8 Ibid, s.57CL

02 Dunne.indd 32 29/05/2014 10:49

Crossing the Legal Rubicon 33

increasingly chosen to exercise their statutory right to appeal.9 This increased

litigation creates legal and practical challenges for the Ombudsman. In

addition to the considerable nancial resources which must be expended

on defending cases, there is also the concern that judges, divorced from the

daily reality of nancial services, may not fully appreciate the role which the

Ombudsman plays within that sector.10 This concern is most pronounced

when analysing the “fairness” of the Ombudsman’s procedures. While the

Act requires a relatively low degree of formality, successive High Court

decisions appear to have diminished the impact of that obligation in the

light of constitutional and administrative law principles.

One aspect of fair procedures—the decision whether to hold an oral

hearing (“the oral hearing decision”)—has proven particularly conten-

tious.11 From a starting point of relative deference, the courts now require

oral hearings in a wide array of circumstances, notwithstanding decisions

of the Ombudsman to the contrary. The increasing role which judges play

in deciding procedures places additional pressures upon the Ombudsman

and restricts the Bureau’s capacity to act as an informal arbiter.

This article proposes to critically analyse the current High Court and

Supreme Court case law on oral hearings before the Ombudsman. Part I

traces the evolution of court scrutiny of the oral hearing decision, moving

from an initial position of deference towards the new judicial desire for

stricter review. Part II identies three specic aspects of the oral hearing

decision, and considers how judicial focus on these areas hampers the

informal and expeditious resolution of disputes. Part III explores the wider

policy implications of the recent case law, and suggests that the oral hearing

debate has become a symbol for a wider inter-institutional power play.

Finally, Part IV seeks to place the Irish experience in context and discusses

how courts have addressed similar questions in England and Wales.

Part I. Increased Judicial Scrutiny of the Oral Hearing Decision

The Act does not expressly require the Ombudsman to hold an oral hearing

as part of his adjudication procedures nor has the Financial Services

Ombudsman Council provided guidance on the holding of such hearings

under its power to issue regulations.12 Section 57CE(1) of the Act enables the

Ombudsman, for the purposes of investigating a complaint, to require a FSP

to give information orally or in writing. Under s.57CE(4), the Ombudsman

9 Donnelly, supra note 2; Murphy supra note 3

10 Donnelly rejects this criticism of the Courts, arguing that “a closer look at the case law

to date does not suggest an overly interventionist judiciary. In fact, for the most part,

the judiciary has been aware of the value of the service provided by [the Ombudsman]

and the costs of an overly interventionist approach”; Donnelly, supra note 2

11 Collins, supra note 3; Murphy, supra note 3

12 The Act, supra note 4, s.57BF

02 Dunne.indd 33 29/05/2014 10:49