R (on the application of Brinsons (a firm)) v Financial Ombudsman Service Ltd

Mortgage – Endowment policy – Claimant arranging mortgage-linked policy – Clients complaining policy missold – Whether financial ombudsman having jurisdiction to deal with complaint – Application dismissedThe claimant was a firm of chartered surveyors and estate agents that had, prior to March 2002 and incidental to its principal business, arranged mortgage-linked endowment policies for some of its clients. Section 3 of the Financial Services Act 1986 provided that no person should carry on investment business, which included arranging and advising on endowment policies, unless he or she was authorised to do so. By section 7 of the 1986 Act, a member of a recognised self-regulating organisation was deemed to be an authorised person. Between 1988 and 1994, the claimant was a member of the Financial Intermediaries Managers and Brokers Regulatory Association (FIMBRA) and between 1994 and 1997, it was a member of the Personal Investment Authority (PIA). From July 1997 and until March 2002, it had been an exempted person under the Act, after which it had not conducted any regulated investment business.The defendant was constituted by Part XVI of the Financial Services and Markets Act 2000 to investigate and adjudicate on complaints brought by clients who were dissatisfied with investment advisers. By para 3(a) of the Financial Services and Markets Act 2000 (Transitional Provisions)(Ombudsman Complaints Scheme) Order 2001 (SI 2001/2326), the defendant had jurisdiction to deal with a complaint relating to an act or omission that had occurred before the 2000 Act came into force, if the act or omission was that of a person who, immediately before the commencement of the Act, was subject to a former scheme. In 1992, the claimant had arranged an endowment policy for two clients, they did not complain about misselling until 2004. The defendant decided that it had jurisdiction to hear and determine the complaint. However, the claimant sought judicial review of that decision, contending that, once it had ceased to be a member of the PIA, it was no longer susceptible to an investigation and determination by the PIA ombudsman. Accordingly, it had not been subject to a former scheme when the 2000 Act had come into force. Held: The application was dismissed.The correct interpretation of the PIA rules was that, even after membership had ceased, a former member was obliged to co-operate in the investigation and adjudication of a complaint by the PIA ombudsman.On that basis, the claimant had been bound by the rules of the PIA until the 2000 Act came into force. Accordingly, it had been subject to a former scheme on the relevant date and within the conditions specified in para 3 of the 2001 Order. It followed that the claimant was subject to the jurisdiction of the defendant and the latter’s decision to assume jurisdiction was valid and lawful. Per curiam: Had the court’s view been that the defendant did not have jurisdiction to investigate and determine the complaint, it would not have refused relief on the ground that the application for judicial review was premature. It had been proper to challenge the defendant’s jurisdiction when it was first reasonable to do so. Had the court accepted the claimant’s submissions on the interpretation of the relevant legislation and rules, the investigation would have come to a halt and time, effort and money would have been saved.John Virgo (instructed by Berrymans Lace Mawer) appeared for the claimant; Jonathan Moffett (instructed by the legal department of the Financial Ombudsman Service Ltd) appeared for the defendant.Eileen O’Grady, barrister