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With the Financial Services Ombudsman (FSO) reporting a high
level of complaints to his office in 2011, he has also been active
in the courts, with a number of recent landmark rulings taking
place.
In Lyons v FSO1 the High Court held that the
FSO's decision to proceed without an oral hearing was an error
in law and had negated the appellants' (Lyons) constitutional
rights to fair procedures. The Court held that without an oral
hearing, the appellants could not have realistically hoped to
establish the underlying merits of their case.
This ruling will have a significant impact on the FSO's
deliberations as to whether or not complaints should proceed to
oral hearing. This in turn, as the Court acknowledged, will have
significant cost and resource implications for the FSO in current
times of austerity.
The Court also observed, by reference to the relevant
legislation, that the nature of complaints now dealt with by FSO
was such that it is now difficult, if not impossible, to
distinguish between complaints to the FSO and commercial litigation
involving banks and non-corporate customers. The Court suggested
that an uncomfortable consequence of this is that a bank customer
who had defaulted on his loan agreement may potentially fend off
significant commercial litigation by initiating a complaint to the
FSO. The Court suggested that a review of the proper scope and role
of the FSO vis-à-vis the Court system was required.
Although not involving a direct appeal of an FSO decision,
another related case of note is O'Hara v. ACC Bank2.
Here, the plaintiff attempted to bring separate High Court
proceedings following the prior determination of his complaint by
the FSO.
In this instance, the High Court prevented the plaintiff from
taking another bite of the cherry, holding that the 'principles
of estoppel' cover issues both previously tried by a judicial
or quasi-judicial tribunal and issues which could and should have
been included for adjudication in the earlier determination. In
layman's terms, this principle provides that a plaintiff cannot
seek a ruling through one particular forum (ie the FSO), and then,
when a ruling has been provided (which may not be in their favour),
seek to use another forum (ie the High Court) to re-argue the
case.
The High Court concluded that as the Oireachtas has made any
determination by the FSO subject only to an appeal, absent a
special reason of sufficient impact to nullify any potential abuse
of process or unconstitutionality, the complaint could not be
re-litigated all over again.
In light of this decision, claimants must carefully decide
whether to opt for the substantially cheaper option of making a
complaint to the FSO - and accept the risk of an unfavourable
finding - or take their chances before the Courts. However, it is
clear that they cannot do both.
Footnotes
1. [2011] IEHC 454
2. [2011] IEHC 367
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