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Battle lines drawn over right to sue after FOS award

Battle lines drawn over right to sue after FOS award

The battle lines have been drawn for a legal showdown to decide whether consumers can claim further compensation after accepting an award from the Financial Ombudsman Service (FOS), according to a lawyer at the heart of the case.

The stage has been set for a judge to give a definitive answer on the contentious issue following the decision by advice firm In Focus Asset Management & Tax Solutions to request an appeal against a recent ruling that its clients, Barry and Julie Clark, could claim further redress despite having already received £100,000 from the FOS.

The Clarks’ victory was itself an appeal against a county court decision, meaning In Focus Asset Management & Tax Solutions has requested a second appeal.

New Model Adviser® understands the advice firm has bid to appeal the decision by judge Ross Cranston on the grounds that it clashed with a 2010 judgment by judge Mark Pelling that accepting a FOS award ruled out court action over the same complaint.

Barrister Clive Wolman, of 11 Stone Buildings, who is representing the Clarks, said requests for a second appeal were rarely granted, but he expected it to be in this instance, and that the ensuing ruling would override the previous judgments from Cranston and Pelling.

‘If it goes to the Court of Appeal, it would definitely override both of the decisions, but otherwise I think the judges would go with Cranston’s decision because he’s more senior and it’s more recent,’ he said.

In the wake of the Clarks’ victory, the FOS updated its consumer guidelines to say: ‘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.’

Advisers have voiced fears the ruling could lead to professional indemnity cover costs jumping even higher.

Roderic Rennison, director of consultancy firm The Ideas Lab, said there was an urgent need for clarity for consumers and advisers.

‘There has to be a known process and there has to be quality [to that process],’ he said. ‘This has thrown it into significant doubt.’

Gill Cardy, managing director of trade body IFA Centre, said the most recent decision undermined the spirit of the FOS.

‘I don’t think it’s right that the free system that the FOS sets up should be able to be used as a first instalment of the claim.’

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