global insurance management

Financial Ombudsman

Nov 19 2010

Financial Ombudsman and Civil proceedings

Relevance: All authorised firms

Action required: None - issued for information only.

A recent ruling in a high court judgement (Andrews v SBJ Benefit Consultants) has confirmed that if a claimant has accepted an award of compensation made by the Financial Ombudsman Service (FOS) they cannot then bring a civil claim in relation to the same matter.

In this particular case, compensation was sought following a loss on transfer from an occupational pension scheme to a personal pension scheme.

Liability was admitted and the FOS ordered payment of compensation but could only insist on the sum of £100,000 (which is the maximum award the FOS can currently make). The FOS did recommend paying more but the firm declined!
The claimant accepted the award of £100,000 and then instigated civil action to claim the balance of compensation.
The judge held that the FOS is a judicial tribunal of competent jurisdiction which had made a final judgment on the matters raised in the litigation, and that no further claim could succeed.
What it means now is that where claims exceed £100,000, claimants will need to decide whether to accept the FOS award up to the limit or reject the decision and pursue the claim through the civil courts to recover the full amount without limit. They cannot do both.

Remember though, the FSA has proposed that the maximum award should be raised to £150,000 with effect from January 2012.

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