The Court of Appeal has recently confirmed that where a consumer has accepted a decision of the Financial Ombudsman Service (FOS), the consumer will be prohibited from bringing the same claim in the Court for further damages.
In Clark v In Focus Asset Management, the claimants ('the Clarks') alleged they had lost £300,000 as a result of negligent investment advice from the defendant ('In Focus'). The Clarks first made a complaint to the FOS, which at the time could only award compensation to a maximum limit of £100,000. The FOS held that the Clarks were entitled to compensation and made an award at the statutory limit of £100,000, with a recommendation that full compensation should be paid. The Clarks accepted the £100,000 award, specifically stating on their acceptance that they reserved their right to bring legal proceedings for the losses they had suffered in excess of £100,000. They then brought a damages claim in the Court for these losses.
The Court of Appeal held that once a complainant has accepted an award by the FOS, they cannot bring the same claim in Court for damages, even where the FOS award is for less than the amount of their losses. Therefore, despite their attempt to reserve their position, the Clarks were precluded from pursuing their damages claim and were restricted to the £100,000 they had received. However, the Court made it clear that damages claims will only be precluded where the complaint put before the Court is the same in substance as the claim that had been put before the FOS.
This is an important clarification of the status of the FOS awards, which should lead consumers to consider carefully whether they wish to pursue complaints before the FOS or in Court.
Matthew Walker is a senior associate in Burges Salmon's Disputes and Litigation team.