Substantial delays and the FOS - R (on the application of CALLAND) v FINANCIAL OMBUDSMAN SERVICE LTD (2012)

The court has recently decided that a six and a half year delay between the FOS receiving a complaint from an investor and making a final decision against an IFA did not breach the IFA's rights under Article 6 of the ECHR.

The FOS complaint concerned an investor being advised to take out a personal pension rather than to join his employer's occupational pension scheme. The advice was given in April 1992. Twenty years later, in February 2012, the FOS made a final decision, upholding the complaint and ordering the IFA to pay full compensation to the former client. The FOS' investigation into the complaint itself lasted more than six and a half years.

Following the FOS' decision the IFA sought judicial review on the basis that the time taken to determine the complaint was unreasonable and breached his rights under Article 6 of the ECHR. The IFA argued that there was a factual dispute which was central to the decision that the FOS had to make, and that in the absence of contemporaneous documents this could not fairly be resolved without an oral hearing, and that the delay in providing a final decision breached his rights under Article 6 of the ECHR. The FOS submitted that the determination took so long because of the IFA's conduct, which included sustained procedural and jurisdictional objections to the FOS' investigations and a refusal to cooperate or engage with the investigation. The IFA also made repeated threats of legal action against the FOS in an attempt to deter the progression of the investigation.

The court held that the merits of the FOS complaint itself were not complex. The complaint revolved around two factual questions:

1.             What advice was given by the IFA to the client; and

2.             Was that advice suitable?

The court held that the IFA himself had substantially complicated issues by his continually making jurisdictional and procedural objections and threatening legal action. The court held that it was undoubtedly the IFA's own conduct which was the principal cause of the substantial delay in the FOS reaching a final conclusion.

The court held that the IFA was entitled to avail himself of the FOS' complaints procedure and to challenge the complaint on jurisdictional grounds, but that it was not then open to him to complain about the resulting delays as the FOS dealt with the issues he himself had raised. The Court did hold that there was a two year period when the question of jurisdiction was before the ombudsman, and that the FOS could be held responsible for this particular delay, but that it would be artificial to hold that the time taken to reach a decision actually constituted a breach of Article 6. The IFA also submitted that the lack of contemporaneous documents meant that the matter could not fairly be resolved without an oral hearing. The court quite sensibly held that an oral hearing would not have assisted in determining what advice was given 20 years ago and would not have been necessary to determine the complaint.

It is interesting that the court found that a delay of two years to determine jurisdiction was down to the FOS, but did not choose to criticise the FOS for this. This claim gave the judiciary some limited scope to 'push back' on the FOS, an organisation which they generally consider has outgrown its original purpose and which is guilty of 'mission creep'.

It is possible that the result could have been different if the IFA had not been found responsible for the extensive delay in the final decision being reached. Even then, however, whilst a delay of six years is certainly inconvenient, it is no surprise that the court did not view it as a breach of human rights.

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