Is FOS subject to judicial review?

The decision of the Victorian Supreme Court of Appeal in Mickovski v Financial Ombudsman Service Limited [2012] VSCA 185 means that judicial review, normally available for decisions of government entities, does not apply to FOS.

In that case, the complainant had been refused benefits under an insurance policy. Under the FOS terms of references at the time complaints were excluded where six years has elapsed since the complainant knew or ought to have known of all the relevant facts. FOS found that the complaint had been lodged out of time and refused to deal with it. The complainant sought judicial review of FOS’ decision on the basis that new information had come to light within the last six years and so the limitation time had only recently started running.

The court agreed that FOS made a mistake but held that as FOS was a private entity exercising private law duties pursuant to its contract with members, and not public duties, judicial review of its decisions is not an available remedy. The court held that both the complainant and the insurance company agreed to submit themselves to FOS processes and be bound by its Terms of Reference, which prevented the court reviewing mistakes made by FOS. The relevant clause of the Terms of Reference provided that the decision was ‘final’ and ‘not subject to review unless affected by fraud or dishonesty or lack of good faith or…..not carried out in accordance with the agreement’. Given the absence of the elements necessary to make the FOS decision reviewable by the court, the complainant had no recourse and his appeal was dismissed.

This decision is alarming for lenders because it means that if FOS gets it wrong, they have no ability to challenge its decision in the courts.

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