• GL
Choose your location?
  • Global Global
  • Australian flag Australia
  • French flag France
  • German flag Germany
  • Irish flag Ireland
  • Italian flag Italy
  • Polish flag Poland
  • Qatar flag Qatar
  • Spanish flag Spain
  • UAE flag UAE
  • UK flag UK

To Judicially Review or not: Key considerations for challenging the FOS

07 May 2019
Banking and finance - building with Share price digital ribbon running along facade

A familiar gripe we hear from financial services firms is (often justifiably) the expression of outrage about an Ombudsman's decision. With the expanded FOS jurisdiction and the increase to the potential FOS compensation award to £350,000, we expect to hear these gripes a little more often and a lot louder in the future. 

As some of you may know, unfortunately, once an Ombudsman decision has been made (and accepted by the complainant) the only official route of appeal is via a Judicial Review (JR). A JR is a public law claim that can be filed at an administrative court to challenge a decision, omission or action of a body carrying out public functions. Courts are generally cautious about intervening in how public functions are exercised by public bodies and the hurdles are set high. It is intended as a last chance for citizens to challenge the might of the state.  Therefore, it is generally difficult to succeed with a JR, particularly for firms trying to dispute liabilities to consumers. Not only is it difficult to succeed but success can merely result in the Ombudsman's decision being quashed and a separate Ombudsman being asked to reconsider the case.

It is noticeable that, generally, the FOS doesn't often 'lose' when they defend a JR through to a hearing. The FOS knows the law generally makes it hard for them to be successfully reviewed. We also consider them good at picking 'winners' and will quietly settle 'losers' at a pre-hearing stage. This does provide potential opportunities for firms to have an Ombudsman decision reconsidered if they can persuade the FOS that the decision may not be entirely sound.

Taking all this into account, it is important to weigh up all the potential factors when deciding to JR an Ombudsman decision. Generally, we advise our clients to consider the following: 

  • Prospects: There are relatively few cases where you will likely be confident of succeeding with a JR. Some cases have better prospects than others. Cases that involve challenging the FOS' jurisdiction to determine a case, rather than whether they made the correct decision, generally have a far better prospect of succeeding. The Courts appear more readily prepared to find that a complaint was not within the FOS' jurisdiction rather than finding that the decision made was wrong (as they would generally need to make a finding that the decision made was 'Wednesbury unreasonable'). 

A decision is 'Wednesbury unreasonable' if it is so unreasonable that no reasonable person acting reasonably could have made it – a very high threshold to meet. This is because the Courts consider whether the FOS has jurisdiction to hear the complaint as a 'matter of law' whereas a decision on the facts of the case is generally a 'matter of fact' and interpretation by the FOS, using its 'fair and reasonable' jurisdiction. Courts give the FOS significantly more leeway in 'matters of fact' rather than 'matters of law'.

  • Impact on the business: This is often a more important question than the prospects of the potential JR. If the Ombudsman's decision goes to the core of your business and/or is a business critical issue as there is a (potential) systemic exposure, a JR should be seriously considered. Whereas, if the upheld decision relates to unique or specific facts, it is generally advisable from a commercial perspective to 'let it slide', no matter how frustrating it may be. The main reasons for this are the likely low chance of success; the costs and time involved and the potentially adverse publicity which may result in more complaints being made.
  • Impact on the wider industry: Whilst not directly relevant to an individual firm's decision to bring a JR, the FOS' decisions may have a significant impact on the industry. Often, a systemic issue for one firm may be systemic in the industry. There is no more obvious example than the Berkeley Burke case (for which permission was obtained to appeal to the Court of Appeal with a hearing expected in October 2019). 
  • Risk of crystallising a systemic liability: Depending upon the circumstances behind a complaint and the decision made by the FOS and the Court, there is a risk of crystallising a systemic liability (see DISP 1.3.3 and DISP 1.3.6). DISP 1.3.3 and 1.3.6 deal with a firm's obligation to conduct root cause analysis of complaints and identify systemic or recurring problems (whether arising from complaints or otherwise) and, if necessary, conduct a proactive past business review and redress exercise. Careful consideration should be given to this both pre and post the decision to bring a JR.
  • Publicity: There is often a lot of interest in any attempted JR of the FOS, particularly where it may curtail its powers and/or require a re-think over its decision making process. Accordingly, it is highly likely there will be publicity about any attempted JR. This will mean various people come to know about the potential issue, including other clients, suppliers and peers, and claims management companies (CMCs). If the FOS decision is upheld, it will encourage claimant solicitors and CMCs to 'drum up' further complaints. 

However, publicity does not always have to be a negative. Depending upon the nature of the issue it could be used to stimulate important industry wide conversations. This could help to mitigate any potential fallout and/or result in lobbying for rules to be reconsidered in light of unexpected consequences.

  • Costs: It is recommended that you seek legal advice and assistance if you are considering applying for a JR as it is a specialist process. The costs can be fairly significant which should be factored into the equation. That being said, the court fees are mercifully cheap and, generally, the direct legal cost of bringing a JR is often far less than the cost of the FOS decision, particularly where it goes to the core of your business practice. If you lose, you will also have to pay the FOS' costs but they tend to be 'reassuringly reasonable'.


With FOS awards of up to £350,000, we expect to see an increase in firms considering JR. It is important to weigh up the specific pros and cons of doing so and take advice on this prior to deciding one way or another. You should also discuss this with your Professional Indemnity insurers before taking any decisions. They may also cover the costs (or part thereof) of a JR, particularly for a potentially systemic issue.

The above sets out the key considerations when deciding to bring a JR. For further information or advice on this, please contact Robbie Constance and/or Aaron Osborn.


Further Reading