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FOS updates consumer guidance after High Court ruling

by Michelle Abrego on Jan 07, 2013 at 12:42

FOS updates consumer guidance after High Court ruling

The Financial Ombudsman Services (FOS) has changed the wording on its guidance to reflect a recent High Court decision that allows consumers to pursue additional compensation through court after receiving the maximum award from the Ombudsman.

In December, Judge Ross Cranston ruled that investors Barry and Julie Clark could claim further damages from In Focus Asset Management & Tax Solutions despite the firm having paid £100,000 compensation on the FOS judgement.

The payout was the maximum the FOS could award at the time.

The pair alleged they incurred loses of £500,000 after being mis-sold endowment policy plans. Cranston’s decision overturned a ruling from 2010 that said accepting a FOS award ruled out court action over the same complaint.

In response to the latest ruling the FOS has changed its guidance to consumers.

It now says: ‘Until recently, if a consumer accepted our decision they could not then take the business to court.

‘However a decision from the High Court in December has taken a different view on this decision. For more information about this, please see our consumer factsheet on compensation over £150,000.’

A spokesman for the FOS said: ‘We have to provide an accurate and fair representation of the current situation. We have to make sure they have correct and up to date guidance.’

The landmark ruling also has advisers concerned that professional indemnity insurance cover costs could rise as consumers can pursue them twice over the same piece of advice.

4 comments so far. Why not have your say?

Usually found sitting on the fence

Jan 07, 2013 at 15:35

Will this open the FSA (FCA) up to the courts? When they make a decision that is not just or fair to IFAs...

At best this change will put off the borderline criminals, but in reality it is more likely to penalise those who abide by the rules and maybe, just maybe, has a bit of unforseeable bad luck. Probably Sad days!

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Jonathan Kirby

Jan 07, 2013 at 15:53

Surely it would be better for the Ombudsman to refuse to get involved in cases which exceed their maximum mandate.

This really does make a mockery of the system.

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Paul Howard via mobile

Jan 07, 2013 at 16:17

Wasn't part of the court ruling due to the FOS Ombudsman getting it wrong on what the 'full and final settlement' meant?

If I remember correctly the Ombudsman said they could sue for the excess amount and that was the basis the complainants accepted the FOS award?

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Usually found sitting on the fence

Jan 07, 2013 at 16:52

@ Paul Howard - I don't know enough about the finer details, but got the impression from the article that the court decided to interpret the wording "full and final Settlement" to mean in respect of the FOS responsibility towards the complainant. Whereas, I am sure most believed it to be a statement bringing the matter to a neat and tidy end. As in, once accepted the FOS decision was binding.

Sort of makes it a win win situation for the client, unless the court finds in favour of the IFA and then what happens with regard to the FOS payment? Another situation where the legal profession are the ultimate winners!

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