Oral Hearings Before The Financial Services Ombudsman

Author:Ms Sharon Daly and Darren Maher

In recent years there has been a trend for findings by the Financial Services Ombudsman ("FSO") being appealed to the High Court on the basis that the FSO failed to hold an oral hearing.

A recent decision of the High Court held that where there is a material conflict of fact in a complaint before the FSO, the constitutional right to fair procedures requires the FSO to hold an oral hearing.

In Smith & Anor v Financial Services Ombudsman & Anor ([2014] IEHC 40), the appellants, on the advice of Ulster Bank, joined a consortium of investors who invested in property.  The investments performed badly and the appellants suffered significant financial losses as a result.  The appellants made a complaint to the FSO, alleging that they were never properly advised that the investment scheme was of a high risk nature.  In response, Ulster Bank argued that the appellants were furnished with a memorandum outlining the risk strategy, though the appellants submitted that this was sent after they had made the investment.  The appellants sought an oral hearing on the basis that the complaint could not be dealt with on documents alone. 

The FSO took the view that there was no material conflict of fact and found that the complaint was not substantiated.  The FSO stated that any conflicting accounts by the parties could be resolved on the basis of the documents before him, and as such it was not necessary to hold an oral hearing in order for them to reach a decision. 

Barrett J considered the role of the Court in an appeal from a decision of the FSO and confirmed that the "Ulster Bank test", as set out in Ulster Bank Investment Funds Limited v Financial Services Ombudsman and Others ([2006] IEHC 323) ought to be applied.  This test requires the Plaintiff to establish, as a matter of probability, that the FSO's decision was vitiated by a serious and significant error or a series of such errors.  In applying this test, the Court is also compelled to have regard to the degree of expertise and specialist knowledge of the FSO.  Barrett J noted that the case-law suggests that this deference extends to the FSO's area of specialisation, ie financial services matters, but not to areas of procedural fairness.

The Court held that by declining to hold an oral hearing the FSO, in effect...

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