Is a decision of the FOS final?

Having accepted a favourable determination from the Financial Ombudsman Service (FOS) can you then claim in Court for additional compensation to recover the full alleged loss? The case of Andrews –v- SBJ Benefit Consultants Ltd [2010] EWHC 2875 (Ch), [2011] Bus LR 1608 would suggest not. However, the more recent case of Clark and Another –v- Focus Asset Management and Tax Solutions Ltd [2012] EWHC 3669 (QB) would suggest otherwise, in certain circumstances.
Mr and Mrs Clark, in their late sixties, sold their business and business premises in 2004. They received financial advice from Focus which led them to borrow an additional sum and invest, together with the proceeds of sale, in endowment policy plans leading to losses thought to be in excess of £500,000. They complained to the FOS in 2008 who concluded the complaint should be upheld. The FOS’s jurisdiction was then limited to £100,000 but the Ombudsman, in support of an earlier decision by an Adjudicator, recommended that Focus paid the full amount of the loss. Focus did not agree and offered £100,000 in full and final settlement of the complaint. In February 2010 Mr and Mrs Clark reluctantly accepted the offer and amended the pro forma FOS acceptance form to add “We reserve the right to pursue the matter further through the Civil Court.” Payment was made by Focus on 19 March 2010. Mr and Mrs Clark commenced proceedings in respect of the balance in June 2010, within 6 years of the alleged negligent acts on the part of Focus. The claim was initially struck out on the basis that Mr and Mrs Clark had accepted the Ombudsman’s award and the Court had no jurisdiction to hear the claim. The rider to the Acceptance Form had no effect, said the judge and having accepted the decision of the Ombudsman, they were barred from litigating as the doctrine of merger applied. The effect of the doctrine is that, a person who has obtained a final judgement in a tribunal of competent jurisdiction is precluded from later recovering, in Court, a second judgement for the same relief in respect of the same subject matter.
The Court of Appeal did not agree with the first instance judge on the basis the FOS was not a “tribunal”. In particular the scheme was one for the “informal resolution of disputes”, the FOS need not apply the law in reaching a disposal of a complaint and any determination was not binding unless accepted by the complainant. The Court of Appeal said that the FOS deals with complaints and not causes of action. Therefore any reference to “final” in respect of the FOS’s findings refers to the end of the FOS’s process and does not result in the operation of the doctrine of merger whereby the claim is extinguished. In addition, the FOS does not prevent claimants from claiming damages for an amount in excess of the FOS’s determination, which they have accepted. Mr and Mrs Clark were, therefore, able to pursue their claim in court.

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