To Be Or Not To Be A 'Consumer': A Question For The Court, Not FOS

Author:Mr Richard Caird, Sam Coulthard and Alexandra Doucas
Profession:Dentons (United Kingdom)

R (on the application of Bluefin Insurance Services Ltd) v. Financial Ombudsman Service [2014] EWHC 3413 (Admin)

The court has recently considered an application for judicial review of a decision made by the Financial Ombudsman Service (FOS) to entertain a complaint against the applicant (Bluefin).

The court decided:

the question whether a complainant was eligible to complain to FOS was one of precedent fact to be decided by the court and therefore not within FOS's discretion; and the complainant was not a consumer within the meaning of the Financial Services Handbook and accordingly was not an eligible claimant. This means that FOS has no room for error in making judgement calls about eligibility, even if the case is a difficult one where different reasonable conclusions might be reached: if FOS makes the wrong decision, the Court will overturn it.


The complainant to FOS was Mr Lochner, who had been CEO of an online gaming business, Betbroker. Betbroker had taken out a D&O policy using Bluefin as a broker, and Mr Lochner was an "insured person" by the terms of that policy. Betbroker went into administration in August 2008, and the D&O policy expired in September 2008. Prior to that, Betbroker had secured an investment of some £500,000 from Aberdeen Asset Management (AAM). AAM argued that such investment was procured by misrepresentations made to it by Mr Lochner, in respect of which it later sued him. AAM's claim was issued in September 2011.

Mr Lochner alleged that he had notified Bluefin of the possible claim in August 2008, but that it had failed then to pass on his notification to the insurers, such that when Mr Lochner later sought confirmation that the D&O policy would cover the claim made against him, his insurers declined to provide cover, claiming that they had not been notified of the claim before the D&O policy expired.

FOS decided that Mr Lochner was an "eligible complainant" on the basis that he was a "consumer", and that it would consider his complaint against Bluefin. In the judicial review proceedings, Bluefin challenged that decision, on the grounds that Mr Lochner was not in fact a consumer, and that FOS therefore had no jurisdiction to consider his complaint.

The disputed definition and the grounds of review

Under section 226 of FSMA, FOS has compulsory jurisdiction in relation to complaints made by complainants who are "eligible". The criteria for eligibility are contained in the FCA's rules. There are...

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