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Cite as: [2023] EWHC 333 (Admin)

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		Neutral Citation Number: [2023] EWHC 333 (Admin)
		Case No: CO/3076/2022

IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

17 February 2023

B e f o r e :

Margaret Obi
(sitting as a Deputy High Court Judge)
____________________

Between:

	The King (on the application of) Greg Moniak	Claimant
	- and -
	Financial Ombudsman Service	Defendant
	- and -
	Barclays Bank UK Plc	Interested Party

____________________

James MacDonald KC (acting pro bono under the auspices of Advocate) for the Claimant
James Strachan KC (instructed by the Financial Ombudsman Service) for the Defendant
Rupert Allen (instructed by TLT PLP) for the Interested Party
Hearing date: 6 December 2022
____________________

HTML VERSION OF APPROVED JUDGMENT
____________________

This judgment was handed down remotely at 10.30am on 17^th February 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Margaret Obi:

Introduction

This is a claim for judicial review. The Claimant ('Mr Moniak') challenged a decision ('the decision') of the Defendant ('the Financial Ombudsman Service - FOS') in which it refused to reconsider his complaint against the Interested Party ('Barclays'). The refusal was on the grounds that court transcripts ('the transcripts'), obtained by Mr Moniak after the complaint had been determined, did not amount to "material new evidence". Mr Moniak submitted that this decision was wrong, irrational, and/or unreasonable as the transcripts fundamentally contradict the core factual premise on which the Ombudsman had earlier rejected Mr Moniak's complaint.

The FOS is a statutory body established under Part XVI of the Financial Services and Markets Act 2000 (FSMA). Section 225(1) of FSMA provides for a scheme "under which certain disputes may be resolved quickly and with minimum formality by an independent person". The independent person is the Ombudsman. The compulsory jurisdiction of the FOS is established under section 226 of FSMA and exists, where the complaint "relates to an act or omission of a person in carrying on an activity to which compulsory jurisdiction rules apply". There are three conditions: (i) the complainant is eligible; (ii) wishes to have the complaint dealt with under the scheme; and (iii) is making the complaint against an authorised person. All three conditions were satisfied in this case.

The claim was issued on 8 September 2021. On 21 February 2022, Mr Justice Bourne ordered an oral hearing of Mr Moniak's permission application. At the oral hearing, which took place on 15 June 2022, Mr Vikram Sachdeva KC (sitting as a Deputy High Court Judge) granted permission.

Relief Sought

Mr Moniak in his claim form sought:

i. An order quashing the decision of the FOS not to reopen and reconsider the complaint in light of the transcripts; and

ii. A mandatory order requiring it to do so.

iii. Alternatively, a mandatory order requiring the FOS to explain with reasons its conclusion that the transcripts were not material new evidence requiring the complaint to be reopened.

The FOS' Offer

The FOS maintained that the decision was not wrong, irrational, and/or unreasonable. However, in an attempt to resolve these proceedings, it offered to reconsider the decision not to reopen Mr Moniak's complaint. The offer (if it had been accepted) would entail a fresh Ombudsman: (i) reconsidering whether the transcripts constitute "material new evidence" likely to affect the outcome of the complaint; and (ii) whether such evidence had subsequently become available to Mr Moniak. It was submitted that it will be for that fresh Ombudsman to decide whether or not to consider a second complaint about the same subject matter, having regard to all relevant factors, including any representations from Mr Moniak and Barclays. The FOS submitted that its proposal offers Mr Moniak the principal relief he seeks, namely reconsideration of the decision not to reopen his complaint. Therefore, the FOS submitted that these proceedings are "essentially academic".

The FOS stated that the offer was made for two main reasons. First, in light of the transcripts that Mr Moniak subsequently provided and based on what he says was his confusion as to what was meant by a court judgment. Secondly, the nature of the FOS' discretionary power to decide when to dismiss a complaint, without considering the merits, and its application to the unusual circumstances of this case. The FOS submitted that it cannot provide any guarantee that a second complaint about the same subject matter will be considered, as that is for the Ombudsman to determine, in accordance with the rules which govern its compulsory jurisdiction.

Mr Moniak was not satisfied that this offer of redress goes far enough, as it provided no assurance that the transcripts would be taken into account; only that consideration would be given as to whether they should be. Furthermore, the FOS does not accept that it was wrong to refuse to reopen the complaint and therefore could reach the same conclusion based on the same rationale. It is for these reasons that the FOS' offer was not accepted.

Agreed Issues

The key issues which arose for determination in these proceedings were narrow and were agreed to be as follows:

i. What is the effect of the FOS' offer for a fresh Ombudsman to reconsider the transcripts?

ii. Was the FOS' decision not to reopen Mr Moniak's complaint, without consideration of the merits, unlawful on the grounds alleged in the claim?

iii. What, if any, relief should the Claimant be granted in his claim?

Before I turn to these issues, I will set out the factual background, the legal framework, and the key legal principles relevant to this claim. The sequence of events was not in dispute; what was disputed was how these events should be characterised and the extent to which they should be determined by the FOS or the Court.

Background

Mr Moniak was a customer of Barclays. In November 2010, the proceeds of the sale of a property, inherited by Mr Moniak, were paid into two bank accounts he held with Barclays. The savings account was credited with £370,000 and a smaller sum was paid into the current account. The total, when rounded up, was in the region of £500,000.

Mr Moniak lived abroad between December 2010 and March 2015. When he returned to the UK in 2015, he contacted Barclays to report fraudulent activity, having discovered that both accounts had been emptied. It later transpired that the funds had been depleted by April 2011. Between April 2011 and February 2014, the accounts were kept in credit through cash deposits in the UK and bank transfers.

Mr Moniak notified the police, made a complaint to Barclays, and referred a complaint to the FOS.

Mr Moniak's funds had been stolen by Mr Rahim Saeed and his wife Ms Saima Jan ('the fraudsters'). The fraudsters were known to Mr Moniak. At the end of 2010, Mr Moniak and Mr Saeed travelled together in Thailand. In early 2011 they travelled together to Pakistan for a short trip, and then Mr Moniak returned to Thailand. Following the police investigation, the fraudsters were charged with theft and a trial took place at the Old Bailey in March 2018. Mr Moniak gave oral evidence during the two-week trial. Both Mr Saeed and Ms Jan were subsequently convicted of theft by the jury. The sentencing hearing was adjourned until 19 April 2018. Mr Moniak did not attend the sentencing hearing but a representative from Barclays did attend.

There is no dispute that the fraudsters stole money from Mr Moniak as evidenced by their convictions for theft. However, those convictions were not determinative of the question for Barclays, and subsequently for the FOS, as to whether Mr Moniak had complied with Regulation 57 of the Payment Services Regulations 2009. This regulation requires users of payment services to take all reasonable steps to keep the personalised security features of the payment instruments on their accounts safe.

Mr Moniak complained that many of the withdrawals made by the fraudsters were large (e.g. cash withdrawals of £12,000) and unusual, in that they were made within a very short period of time, to the same or similar beneficiaries, which ought to have alerted Barclays to the fraud. However, Barclays did not query these transactions and did not identify these withdrawals as red flags.

During Barclays' investigation, it produced a Money Management Form ('MMF') in Mr Moniak's name. Mr Moniak has consistently stated that this document is a forgery. Mr Moniak stated that his mother's maiden name was misspelt, the telephone number provided was Mr Saeed's number, and the email address did not belong to him. The MMF also purportedly bears Mr Moniak's signature. Mr Moniak stated that he did not sign the MMF. Barclays noted that the relevant bank card had never left Mr Moniak's possession and would have been required for the ATM withdrawals. Barclays also noted that most of the online banking transfers required authentication, using a PIN sentry card reader, which would only work with Mr Moniak's bank card. Barclays determined at the conclusion of its investigation that there was no evidence of "a third party compromise to online banking or debit card credentials throughout the period of the fraud", and on that basis, did not accept liability for the impugned transactions.

In March 2015, June 2017, and October 2019, Mr Moniak made a number of complaints to the FOS about Barclays. In short, Mr Moniak contended that Barclays had failed to protect him from fraud and was liable for the losses to his accounts. However, the relevant complaint was submitted by Mr Moniak to the FOS on 24 March 2020 ('the 2020 complaint'). Mr Moniak complained that Barclays had negligently permitted the fraudsters to have online access to his account and had failed to identify the fraudulent payments.

The 2020 complaint was initially investigated by a FOS investigator. As stated above, Barclays attended the fraudsters' sentencing hearing. During the FOS' investigation (and at the FOS' request) Barclays provided a note of the Judge's sentencing remarks ('the Barclays Note'). The Barclays Note states:

"1) Rahim Saeed and Saima Jan were married but have since separated.

2) Rahim Saeed and Mr Moniak were friends before Mr Moniak came into these funds.

3) Rahim Saeed and Mr Moniak were both drug addicts and Saeed supported Moniak before he came into his inheritance.

4) When Mr Moniak inherited the funds both men travelled to Thailand.

5) £390,000 was stolen from Mr Moniak.

6) In evidence Mr Moniak stated that Rahim Saeed had spent the funds on 'Drugs and hookers'.

7) £81,000 and £10,000 has been recovered from the defendants and should be deducted from the loss.

Prior to sentencing the judge commented that 'Mr Moniak was living a chaotic lifestyle due to his drug addiction and he was completely incapable to (sic) running his financial affairs so he turned to Rahim Saeed who took over the account [emphasis added] and abused this trust to commit these offences. Rahim Saeed used the money for his own drug addiction and to pay for prostitutes. Some of the money had been paid back to Mr Moniak.' "

In an email, dated 5 June 2020, Mr Moniak was invited to comment on the Barclays Note. Mr Moniak responded on 6 July 2020. He did not accept that the Barclays Note was an accurate record of the Judge's sentencing remarks and he denied that he had handed over his financial affairs to Mr Saeed.

The FOS investigator took the Barclays Note into account and subsequently issued a decision dated 31 July 2020 ('the Provisional Decision'). The Provisional Decision states:

"On balance considering all the evidence, I'm persuaded that the consumer authorised the transactions. This is supported by all of the evidence that has been provided by both sides and it corresponds with the conclusion of the Judge in the criminal trial. Whilst there's evidence of other parties involved in the transactions, I think it's more likely than not that this was through an earlier agreement with Mr Saeed which gave him "apparent authority" to operate the accounts."

The Provisional Decision concludes as follows:

"My view is that I don't uphold this complaint because I think it likely Mr Moniak handed control of his accounts to Mr Saeed. It's accepted that Mr Saeed and his partner were found guilty of stealing a large sum from Mr Moniak. But this complaint is whether Barclays should repay that money to Mr Moniak because they failed to keep his accounts secure and allowed another person to operate the account without Mr Moniak's permission, I think it likely that Mr Saeed's details were introduced into the Barclays system to facilitate this arrangement, giving him "apparent authority" to operate the account.

The comments by the presiding Judge in the criminal trial have to be taken into account, they're clear on the theft of a large portion of Mr Moniak's funds. But they also describe a situation that Mr Moniak handed control of his accounts over to Mr Saeed.

I don't think Mr Moniak realised the problem he'd created by allowing Mr Saeed access to his banking details. Once this was done, the ability for Mr Saeed and his partner to steal the funds was in place. Because Mr Saeed had all the details necessary to run the account, he could arrange for online banking access and answer any questions that the bank might ask if they questioned any of the payments. Irrespective of the intentions Mr Moniak had when he facilitated this arrangement, the transactions were authorised, and I don't think it's reasonable to ask the bank to repay them. [emphasis added]"

On 18 February 2021, the Ombudsman upheld the Provisional Decision for essentially the same reasons. This was the 'Final Decision'. However, such decisions are only binding and final if they are accepted by the complainant. The Ombudsman concluded that although Mr Moniak had not made the transactions himself, Barclays was entitled to treat them as authorised by Mr Moniak. In the Final Decision, the Ombudsman noted that Mr Moniak took the view that the MMF must have been the way in which the fraudsters gained access to his account. The Final Decision states:

"Barclays hasn't been able to tell us much about this form [the MMF]. It doesn't have any corresponding electronic records from the time it was added to Mr M's profile. All its (sic) been able to say is that, if someone wanted to use this document to update contact details in connection with the account, they'd have needed to visit a branch in person with a valid ID document, such as a passport."

.

In the Final Decision, the Ombudsman also relied on the Barclays Note and in particular stated:

"In all the circumstances of this case, I think it's fair and reasonable for Barclays to treat these payments as having been authorised by Mr M. I say that because I think the most likely thing that happened here is that Mr M relinquished control of his accounts to the fraudsters. That is supported by the commentary of the judge at the sentencing hearing. The judge will have had the opportunity to consider a much wider range of evidence than that which is available to me in deciding this case. And in a criminal trial, evidence is given under oath and witnesses can be subject to cross examination. I need to give appropriate weight to these comments when considering how the fraudsters were able to take Mr M's money.

I know Mr M says that he doesn't think the Barclays representative accurately recorded what was said. But in the absence of a transcript of the sentencing hearing (which neither party has been able to provide), they're the best evidence I have of the conclusions reached by the judge. [emphasis added]"

Mr Moniak rejected the Final Decision on 24 February 2021.

The Content of the Transcripts

On 5 March 2021, Mr Moniak requested the transcripts of the Judge's summing up to the jury and the Judge's sentencing remarks. He received the transcripts on 21 April 2021.

In summing up the evidence to the jury the Judge stated:

"The defendants deny stealing this money. In short, Mr Saeed said that everything he did with Mr Moniak's money was with Mr Moniak's knowledge and consent and in connection with an investment that Mr Moniak wanted to make. Mr Saeed denies acting dishonestly, Mr Moniak's account was not taken over, nor was Mr Saeed making card payments, payments or writing cheques.

Ms Jan in summary says…[s]he did not act dishonestly and everything she did was the knowledge and consent of Mr Moniak (sic)…

…

The prosecution in this case cannot point to the exact mechanisms by which Mr Moniak's bank accounts were accessed but they say as a matter of inference that his personal details were known to at least one of the defendants who had lived with him."

The Judge's sentencing remarks included the following observations:

"Greg Moniak was a man who was completely disorganised about money and led a chaotic lifestyle due to his drug addiction to Class A substances. He was in my view, vulnerable to exploitation."

…

…This was a planned and sophisticated offence and, in your case, Mr Saeed, a blatant breach of the trust that Mr Moniak had placed in you as a long-term friend.

…

I have no doubt, Mr Saeed, that you were the instigator of the course of conduct by which this money was systematically taken from Mr Moniak. You targeted him and you abused his trust. You took steps to prevent him from finding out what had happened, and you effectively took over his bank account and used it as your own in the most cynical way imaginable.

In my view, you behaved in a thoroughly dishonest and manipulative way towards your friend and your defence as presented was implausible and rejected by the jury.

The Decision

On 17 May 2021, Mr Moniak sent an email to the FOS, inviting the Ombudsman to reconsider the Final Decision in light of the transcripts. The FOS responded on 10 June 2021, stating that it had reviewed the transcripts but concluded that they were not "material new evidence". Mr Moniak was not satisfied with that response and requested that the FOS provide reasons for its decision.

On 30 June 2021, the FOS replied stating:

"It is very rare that we would consider a second, fresh complaint about the same set of circumstances. There are occasions when material new evidence could potentially change a situation, but what is considered to be material new evidence is, in practice, very narrow. Material new evidence would be information that was not available to the consumer when the complaint was considered [emphasis added]

From what I have seen, the documentation recently provided…is dated from the time in 2018. This means it was evidence that existed and could have been provided before the Ombudsman determined the complaint. I can see that you were concerned about a discrepancy in the sentencing remarks from the very early stages of the dispute, so this information could have been obtained and provided for consideration at an earlier point."

Once again, Mr Moniak sought an explanation of the FOS' position that the transcripts were not "material new evidence". He subsequently received an email, dated 16 July 2021, in which the FOS stated that the Ombudsman's decision was the "final say on [his] case". In that same email, the FOS indicated that it may not respond to any further correspondence with regard to the complaint.

Correspondence relating to the transcripts

During the course of Mr Moniak's earlier complaints, the FOS emailed his sister (who was initially representing Mr Moniak) in relation to the difference between the fact of the convictions and the nature of the complaint being made against Barclays. The email from the FOS, dated 22 June 2018, states:

"… The conviction of theft by the two individuals does benefit Mr Moniak's case but it is difficult to conduct a thorough investigation without access to the court papers and transcripts of what was said. Whilst the bank accept the conviction of theft, they still feel that Mr Moniak misplaced his trust in the perpetrators of the fraud and in doing so, had acted with gross negligence – which is against the terms of the account. I think this issue is still the greatest piece of outstanding information. Have you had a chance to chase this up with DC Brown? [emphasis added]"

The FOS subsequently chased "the court papers", which in an email, dated 23 July 2018, were said to be "crucial" in progressing the complaint. In a further email, dated 21 September 2018, the FOS chased the "court judgment". Mr Moniak's sister responded on 1 October 2018, stating that she had not been able "to obtain the Judgment.". She sent a further email, on 14 November 2018, in which she stated that she had "tried incredibly hard" to ensure that the FOS could receive a copy of the "Judgment". She also queried why the FOS did not send someone to court if the "Court Papers" were considered crucial.

Mr Moniak reiterated his complaint in a letter to the FOS dated 24 March 2020. The letter states:

"I have not to date been able to obtain a copy of the indictment against Rahim Saeed and Saima Jan or the remarks on sentencing" [emphasis added]"

In that same letter, Mr Moniak suggests that Barclays might have copies of the documents, or the FOS could use its "investigative capacity" to locate the information.

Mr Moniak commented on the Provisional Decision in an email dated 13 August 2020. Amongst other things, he was critical of the FOS' reliance on the Barclays Note and complained that they were "not a transcript of the entire summing up".

In a further email, dated 15 December 2020, Mr Moniak stated:

"Please find enclosed the copy of the Court's Judgement as Mr Chowdhury [of the FOS] stated in his email that it was 'crucial with the progress of this complaint (sic)."

A certified copy of the certificate of conviction and sentence was attached to the email, rather than a transcript of any part of the criminal proceedings.

As stated above, Mr Moniak requested the transcripts on 5 March 2021 and received them on 21 April 2021.

The Legal Framework

FOS' Jurisdiction and Procedure

The statutory dispute resolution scheme under FSMA expressly gives the Ombudsman a broad discretion. Section 225(4) and paragraphs 13 and 14 of Schedule 17 to the FSMA provide for the making of rules which address the operation and jurisdiction of the FOS. The rules are contained in the FCA Handbook under the section entitled: "Dispute Resolution: Complaints" ("DISP"). They set out the procedures to be followed, jurisdiction, and matters to be taken into account when determining a complaint. Within DISP, the letter 'R' signifies that a particular provision is a rule, whilst the letter 'G' signifies that it is guidance. DISP 3.5.1 R states:

"[t]he Ombudsman will attempt to resolve complaints at the earliest possible stage and by whatever means appear to him to be most appropriate, including mediation or investigation."

Section 228 sets out the basis upon which the determination of a complaint made under the compulsory jurisdiction will be made. Section 228(2) provides that:

"A complaint is to be determined by reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case."

The FOS' discretion includes a significant latitude in determining how to resolve a complaint and how to approach the use and disclosure of evidence. In accordance with DISP 3.5.5 R:

"[i]f the Ombudsman considers that the complaint can be fairly determined without convening a hearing, he will determine the complaint. If not, he will invite the parties to take part in a hearing. A hearing may be held by any means which the Ombudsman considers appropriate in the circumstances, including by telephone. No hearing will be held after the Ombudsman has determined the complaint."

DISP 3.5.9 R provides (insofar as relevant), that the Ombudsman may:

"(1) exclude evidence that would otherwise be admissible in a court or include evidence that would not be admissible in a court;

(2) accept information in confidence (so that only an edited version, summary 12 or description is disclosed to the other party) where he considers it appropriate;

(3) reach a decision on the basis of what has been supplied and take account of the failure by a party to provide information requested… [emphasis added]"

Outcomes of complaints to the FOS

Section 228(3) states that when an Ombudsman has determined a complaint, he must give a written statement of his determination to both parties. By section 228(4) that statement must, amongst other things, give the Ombudsman's reasons for his determination and require the complainant to notify him, before a date specified in the statement, whether he accepts or rejects the determination. In accordance with section 228(5), if a complainant accepts the determination, it is binding on both parties and final. By section 228(6) if the complainant does not accept the determination, within the specified period, he is treated as having rejected it.

There is no right of appeal against the FOS' decision. There is also no right to request a reconsideration or reopening of the decision. The means of challenging a decision of an Ombudsman is by way of judicial review. The FOS' jurisdiction to amend a final decision is expressly limited under DISP 3.6.7 R as follows:

"(1) An Ombudsman may correct any clerical mistake in the written statement of an Ombudsman's determination, whether or not the determination has already been accepted or rejected.

(2) Any failure to comply with any provisions of the procedural rules made by the FOS Ltd does not of itself render an Ombudsman's determination void."

Dismissal of Complaints

DISP 3.3.4A R provides that:

"The Ombudsman may dismiss a complaint referred to the Financial Ombudsman Service on or after 9 July 2015 without considering its merits if the Ombudsman considers that:

(1) the complaint is frivolous or vexatious; or

(2) the subject matter of the complaint has been dealt with, or is being dealt with, by a comparable ADR entity; or

(3) the subject matter of the complaint has been the subject of court proceedings where there has been a decision on the merits; or

(4) the subject matter of the complaint is the subject of current court proceedings, unless proceedings are stayed or sisted (by agreement of all parties, or order of the court) so that the matter may be considered by the Financial Ombudsman Service; or

(5) dealing with such a type of complaint would otherwise seriously impair the effective operation of the Financial Ombudsman Service [emphasis added]"

DISP 3.3.4B G further provides by way of guidance that:

"Examples of a type of complaint that would otherwise seriously impair the effective operation of the Financial Ombudsman Service may include:

(1) where it would be more suitable for the complaint to be dealt with by a court or a comparable ADR entity; or

(2) where the subject matter of the complaint has already been dealt with by a comparable dispute resolution scheme; or

(3) where the subject matter of the complaint has previously been considered or excluded under the Financial Ombudsman Service (unless material new evidence which the Ombudsman considers likely to affect the outcome has subsequently become available to the complainant) [emphasis added]; or

(4) it is a complaint which: (a) involves (or might involve) more than one eligible complainant; and (b) has been referred without the consent of the other eligible complainant or complainants, and the Ombudsman considers that it would be inappropriate to deal 14 with the complaint without that consent."

The effect of these provisions is that the Ombudsman has a discretion to dismiss a complaint, without consideration of the merits, if dealing with the complaint would otherwise seriously impair the effective operation of the FOS. An example of such a complaint is where the subject matter has previously been considered, unless material new evidence which the Ombudsman considers likely to affect the outcome, has subsequently become available to the complainant (DISP 3.3.4B (3) G). The only contentious issue between the parties, with regard to the provisions, is the meaning of the discretion within DISP 3.3.4B (3) G.

Key Legal Principles

Although the FOS has a broad discretion it must ensure that in determining complaints its approach is fair and reasonable and the conclusions reached are not perverse or irrational – see Clark v In Focus Asset Management & Tax Solutions Ltd [2014] 1 WLR 2502 (CA) at §24 where Arden LJ referred to the judgment of Stanley Burnton J in R (IFG Financial Services Ltd) v Financial Ombudsman Service Ltd [2006] 1 BCLC 534. In IFG it was stated that:

"The ombudsman is required to determine a complaint by reference to what is, in his opinion, fair and reasonable in all the circumstances of the case. The words "in the opinion of the ombudsman" themselves make it clear that he may be subjective in arriving at his opinion of what is fair and reasonable in all the circumstances of the case. Of course, if his opinion as to what is fair and reasonable in all the circumstances of the case is perverse or irrational, that opinion, and any determination made pursuant to it, is liable to be set aside on conventional judicial review grounds. [emphasis added]"

See also R (Williams) v Financial Ombudsman Service [2008] EWHC 2142 where at §26 Irwin J stated:

"The ombudsman is dealing with complaints, not causes of action. His jurisdiction is inquisitorial not adversarial. There is a wide latitude within which the ombudsman can operate. He can depart from the common law if justified, but must explain the extent to which the reasons for any such departure. Next, he can import his knowledge of good industry practice at the time, that being stipulated in the rules... . Next, he must be fair and reasonable in his approach to the case and his conclusions. Next, he cannot be perverse or merely subjective, and will be susceptible to judicial review if he is, both as to the manner in which the decision is reached and as to the outcome [emphasis added]."

Where matters of the FOS' jurisdiction are concerned, the statutory scheme and the DISP Rules will govern what is a matter for the Ombudsman's discretion in accordance with ordinary judicial review principles. For example, see R (Chancery) v Financial Ombudsman Service Ltd [2015] EWHC 407 (Admin) as recently discussed in R (Assurant Ltd) v Financial Ombudsman Service Ltd [2022] EWHC 2766 (Admin).

The FOS' statutory jurisdiction is an alternative dispute resolution process to litigation. It is not subject to the same rules of procedure and evidence as are applicable in the courts. In Westcott Financial Services Limited & Ors v Financial Ombudsman Service [2014] EWHC 3972 (Admin) at [§32] Thirlwell J stated that:

"The ombudsman scheme is designed to permit disputes to be resolved quickly and informally by people who have appropriate qualifications and experience. There is no requirement that processes (or indeed decisions) should mirror those of the courts. On the contrary this is an alternative method of resolving disputes."

Furthermore, a determination reached by an Ombudsman may differ from the conclusion that a court would reach. In determining whether or not a decision is irrational Jay J summarised the question for the court in R. (on the application of Aviva Life and Pensions (UK) Ltd) v Financial Ombudsman Service [2017] EWHC 352 (Admin), as follows: [at §58]:

"…whether the Ombudsman's decision was irrational, in the sense of being "so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it" (see Lord Diplock in CCSU v Minister of the Civil Service [1985] AC 374)."

A decision may also be quashed if it was based on a material error of fact: E v Secretary of State for the Home Department [2004] EWCA Civ 49 at [§66]. There are four requirements: (i) the mistake must be about an existing fact (including mistake as to the availability of evidence on a particular matter); (ii) the fact must be uncontentious; (iii) the claimant must not be responsible for the mistake; and (iv) the mistake must have played a material (but not necessarily decisive) part in the reasoning.

The Issues

Issue 1: What is the effect of the FOS' offer for a fresh ombudsman to reconsider the transcripts?

Submissions

Mr Strachan KC submitted in his Skeleton Argument that the FOS' offer provides Mr Moniak with the principal relief he is seeking; the opportunity for his reconsideration request to be reassessed. He further submitted in his Skeleton Argument, that to the extent that Mr Moniak has sought to persuade the Court to exercise the functions of the Ombudsman, that would not be appropriate, as reconsideration is necessarily a matter for an Ombudsman under the statutory scheme. During his oral submissions, Mr Strachan suggested that Mr MacDonald KC was "trying to drag [the Court] into forbidden territory" by inviting the Court to usurp the role of the Ombudsman. He submitted that Mr MacDonald, in effect, had sought to persuade the Court that there is only one rational outcome and therefore the Court should make a declaratory judgment in relation to the facts. He submitted that this would be wrong in principle. Mr Strachan confirmed that the FOS' offer "remains open".

Mr Allen, on behalf of Barclays, made a similar submission. He submitted that the terms of the offer are the most that Mr Moniak could hope to obtain, as it is for the FOS, as the decision-maker, to determine whether there is "material new evidence" which would be likely to affect the outcome and which has subsequently become available to the complainant; it is not for the Court to re-take the decision. Mr Allen expressed reservations as to whether the FOS' ongoing offer "makes good sense", given that there was no indication that it would be accepted, and the Court has already heard lengthy legal arguments.

Mr MacDonald's submissions, on behalf of Mr Moniak, can be summarised as follows: (i) the transcripts were clearly "material new evidence" which any rational Ombudsman would consider likely to affect the result and which had "subsequently become available" to Mr Moniak within the meaning of DISP 3.3.4B (3) G. Accordingly, the FOS never had a discretion to dismiss Mr Moniak's request to reopen his complaint without consideration of its merits, as it purported to do; (ii) the FOS wrongly treated 'material new evidence' as a hard-edged technical requirement and confusingly and inaccurately told Mr Moniak to get copies of the "Court judgement"; (iii) alternatively, even if the FOS did have a discretion to reject Mr Moniak's request to reopen his complaint, without consideration of the merits, it was still irrational to exercise that discretion in the way the FOS did; and (iv) further and alternatively, the FOS' refusal to reopen Mr Moniak's complaint was made on the basis of a material mistake of fact which satisfies all four of the criteria set out in E v SSHD.

Mr MacDonald refuted the suggestion that the Court was being invited to trespass on the function of the Ombudsman. He submitted that the court should intervene if the law has been misapplied, or if the relevant body has made irrational findings of facts, and that both apply in the circumstances of this case. He reminded the Court that the FOS did not accept that it was wrong to refuse to consider the transcripts and reopen Mr Moniak's complaint. Therefore, it could reach the same decision for the same incorrect reasons. He further submitted that it is not Mr Moniak's case that there is only one rational outcome; simply that the decision that was made by FOS was not rational.

Analysis and Conclusion

It was common ground that it is not the Court's role to determine for itself whether the transcripts amount to "material new evidence". It is to decide whether the FOS erred in law when it decided that the transcripts did not amount to "material new evidence" and whether that decision was based on a rational application of the rules and guidance under the statutory scheme. The rules and guidance have to be applied within the context of the FOS' overarching objective, which is to provide quick, informal, and flexible dispute resolution as an alternative to costly and long drawn-out civil litigation. In general, a court undertaking judicial review of a public authority's decision will take a different approach depending on whether it relates to questions of law or fact. When errors of law are alleged, a court must determine what the law is, and decide whether the alleged error has occurred. However, a court will show appropriate deference to the fact-finding functions of an authority and intervene only if it determines that the relevant decision falls outside the range of reasonable decisions open to the decision-maker. However, as stated by Collins Rice J in Assurant, where a challenge is based on a jurisdictional question, which itself depends on the existence of a matter of fact, then a reviewing court may have to take its own view of whether that fact does or does not exist.

Whether the transcripts are "material new evidence" which would be likely to affect the outcome, and which have subsequently become available to Mr Moniak, is undoubtedly for the FOS to determine. However, this is subject to the usual public law demands of rationality and the avoidance of errors of law. The outcome of this judicial review will determine whether there is any prospect of Mr Moniak's request being reconsidered.

In my judgment, the effect of the FOS's offer is exactly as stated by Mr Strachan. The new Ombudsman will reconsider the transcripts and form a view as to whether they constitute "material new evidence" likely to affect the outcome, which has subsequently become available to Mr Moniak, in accordance with DISP 3.3.4B (3) G. I have no reason to doubt that the new Ombudsman will invite representations from Mr Moniak and Barclays in deciding whether it is appropriate to reconsider the complaint. But how will the discretion under DISP 3.3.4B (3) G be approached?

In general, the Court is concerned with the route by which a decision was reached rather than the merits of the decision itself. However, it can also be argued (as it has in this case) that the findings of fact are irrational or alternatively that they are based on a clear mistake of fact. These exceptions to the general position preserve the court's jurisdiction to restrain the decisions of public bodies, where there are factual errors which have resulted in an error of law. The FOS' offer does not resolve these issues. Furthermore, a court should avoid intervening when a claimant has obtained all the practical relief that could be afforded to them. But that is not the position in this case. The issues, in this case, go beyond Mr Moniak receiving some general benefit from the Court's narrative judgment.

The FOS does not accept that it erred in law, nor does it accept that its findings of fact are irrational. Therefore, despite the concession that has been made, there are still live issues between the parties regarding the status of the transcripts and the nature and scope of the guidance which has the potential to affect the obligations of the FOS. As a consequence, I do not accept Mr Strachan's submission that the claim is "essentially academic".

Issue 2: Was the FOS' decision not to reopen Mr Moniak's complaint without consideration of the merits unlawful on the grounds alleged in the claim?

Mr Moniak's claim essentially advances two grounds of challenge:

Ground 1 - the conclusion that the transcripts were not 'material new evidence' was wrong, irrational, and/or unreasonable; and

Ground 2 - the conclusion that the transcripts could have been obtained earlier was wrong, irrational, and/or unreasonable. I shall refer to this as the timing argument.