The Victorian Court of Appeal has ruled that FOS determinations are final and not subject to court review, save in exceptional circumstances.
The insured received a TPD benefit in 1999 as a result of a back injury, at which time his salary continuance payments ceased. More than 6 years later, the insured lodged a complaint with FOS arguing that the salary continuance payments should have continued notwithstanding the TPD payment. He argued that he was not in fact totally and permanently disabled.
FOS dismissed the complaint on the basis that more than 6 years had passed from when the insured should reasonably have known of all the relevant facts. The complaint therefore fell outside of the FOS terms of reference. The insured asked the Supreme Court of Victoria to review the FOS determination.
The insured argued FOS is effectively discharging a public function and that its decisions should therefore be subject to judicial review, just as administrative decisions taken by government bodies are subject to judicial review. That argument was rejected by the Court which noted that FOS is a private entity, notwithstanding that it conducts a dispute resolution scheme specifically approved by ASIC pursuant to the Corporations Act 2001.
The Court found that there is a three-way contract between FOS, the insurer and the insured and that FOS is bound to make determinations in accordance with the terms of that contract, being the FOS Terms of Reference. However, the Terms of Reference provide that the determination will be final. It follows that determinations are not subject to court review unless tainted by fraud or dishonesty or a lack of good faith.
In this case, although the Court accepted that the Ombudsman had made an error in determining that the complaint was excluded by the Terms of Reference, it was simply an error in the process of reasoning he adopted. The Ombudsman was not guilty of fraud or a lack of good faith. Therefore, the decision was not reviewable.
Mickovski v Financial Ombudsman Service Ltd
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