Once consumers accept a Financial Ombudsman Service (Fos) award firms cannot be sued again, says Reynolds Porter Chamberlain (RPC).
Commercial law firm RPC says a recent Court of Appeal judgment – Fraser v HLMAD Ltd – means once a claimant against a financial services company has accepted a Fos award they will not be able to pursue the company through the courts for any additional sums.
RPC says the case, which related to the statutory cap on employment tribunal payments, will make it almost impossible for a customer of a financial services company to get more than £100,000 through the Fos.
In this case, the claimant won his employment tribunal claim for wrongful dismissal but was only awarded the statutory maximum award of £25,000, despite the tribunal assessing his loss at over £80,000.
The claimant tried to use the courts to claim the balance, but the Court of Appeal upheld the decision to strike out his court action because it said to allow it would leave the employer exposed to double jeopardy.
Although awards from the Fos are “binding and final” once they are accepted, RPC says debate has continued as to whether claimants can then sue through the courts for any balance of their losses over the £100,000 limit.
Jonathan Davies, partner at RPC, states: “If individuals want to claim more than the £100,000 Fos limit then they must bring their claim only in the courts. This ruling should offer financial services companies a bit more legal certainty. When the Fos was introduced the intention was that its rulings should be final and binding. It is good to see that it will stay that way.”
Emma Parker, press officer at the Fos, says the relevance of the case to ombudsman cases is for the parties involved to argue and for the courts to decide.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
Partner Insight Video: Advisers have had to adapt to the changing investment landscape.
Investment trust savings scheme