PRESS RELEASE
SMALL WILTSHIRE BASED IFA WINS
LANDMARK RULING
AGAINST FINANCIAL OMBUDSMAN SERVICE
Judge
declares FOS case fee rule “unfair in principle and in practice”
A small Wiltshire based IFA has won a landmark ruling
against the Financial Ombudsman Service (FOS), with important implications for
the regulators and the industry.
Heather Moor and Edgecomb Ltd. challenged FOS’s
practice of charging firms a fee even when a complaint against them is
rejected.
Judge Rutherford dismissed the claim for case fees
brought by the Financial Ombudsman Service (FOS) against Heather Moor &
Edgecomb Limited. Judge Rutherford found the FOS’s rule under which firms are
forced to pay the costs of dealing with a complaint that FOS rejects to be unfair
in principle and in practice. He said: “No reasonable public body would maintain
and enforce such a rule”.
Husband and wife team Brian and Dolly Pickering, who
founded Heather Moor & Edgecomb Limited 38 years ago, had refused to pay
four case fees and defied FOS to sue them.
Brian Pickering said “We just thought it very unfair that someone can
make a complaint and even if it is found to be groundless we are made to pay.
We believe in fairness. We couldn’t just hand the money over. At some point you
have to stand up for what you believe in.”
FOS was also ordered to pay £2727.55 in the costs
wasted as a result of their failing to obey the Judge’s directions and a
hearing on 7th May 2007 having to be abandoned and £75 expenses to
Mr Pickering (copy of cheque
attached).
Notes for the Editor
Under current rules, FOS demands a case fee of £400
for each case considered by an adjudicator, regardless of the outcome. In the court hearing, FOS confirmed that
virtually every endowment complaint is given to an adjudicator so attracts a
fee even though most complaints against IFAs are rejected.
Judge Rutherford’s grounds for finding FOS’s case fee
rule unfair (as set out on pages 14 and 15 of the attached judgement) are as
follows:
This is a test case and FOS has told Heather Moor
& Edgecomb Limited that it is going to appeal against Judge Rutherford’s
decision. If the appeal fails, then FOS will have to increase the amount it
raises by a levy on all firms and/or charge firms that loose cases a
substantial sum. (See Judge
Rutherford’s point 7 above.)
Heather Moor & Edgecomb Limited was represented
before Judge Rutherford by barrister Kate Livesey, a rising star at 4 Pump
Court (www.4pumpcourt.com). It is expected that 4 Pump Court’s Anthony Speaight
QC (who in an earlier historic case represented Bertrand Fleurose) will lead in
the Appeal Court. Heather Moor & Edgecomb Ltd carried the costs of the
hearing on 7th Nov 2007.
AIFA, the IFA’s trade association, has condemned the way FOS levies fees
on the innocent. It has not, however, brought a case in court to challenge FOS
or supported any IFA in so doing.
HME is launching an appeal to cover the costs of
resisting the FOS Appeal. Arrangements
will be made for moneys to be held in a solicitor’s client account. However, HME will continue to minimise legal
expenditure by using the direct access to the bar scheme, with counsel being
instructed directly.
It is understood that FOS intends to continue issuing
demands for payment of the case fee to innocent IFAs despite Judge Rutherford’s
finding. Brian Pickering is disappointed that FOS has not suspended its demands
for payment pending the hearing of the Appeal: “FOS could and should have
announced that it would suspend demands for payment from the innocent until the
Appeal Court has heard the case. That would have been the right thing to do.”
Case
number: 6SE19301
Court: Trowbridge County Court
Parties: Financial Ombudsman
Service (Claimant);
Heather Moor
& Edgecomb (Defendant)
A
copy of the judgement is attached.
FOR
FURTHER INFORMATION:
HEATHER MOOR AND EDGECOMB LIMITED
Edgecomb House, 23 Calne Road,
Lyneham, Wiltshire SN15 4PT
Brian
or Dolly Pickering (office): 01249 890
412
Brian
Pickering (mobile) 07894 090 654
Joe
Egerton 07932
468 426