Why should the ‘commercial decisions/judgments’ of a financial institution be given any particular weight in decisions?

The request was refused by Financial Ombudsman Service Limited.

Dear Financial Ombudsman Service Limited,

Section 226(2) of the FSMA 2000 requires, in the case of compulsory jurisdiction, that a complaint to the Financial Ombudsman Service (“FOS”) should be determined “with reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case”. Rule DISP 3.6.4 R of the FCA Handbook provides that in considering what is fair and reasonable, the Ombudsman will take into account relevant a) laws and regulations b) regulators rules, etc., c) codes of practice and (d) where appropriate, what (s)he considers to have been good industry practice at the time. There is no reference in DISP 3.6.4 R to any 'commercial judgement' test.

DISP 3.3.4, item 11 made it clear that in relation to complaints filed BEFORE 9 July 2015, the Ombudsman may dismiss a complaint about the “legitimate exercise of a respondent´s commercial judgment”. That ground for dismissal does not apply under the revised DISP (3.3.4A R) to complaints filed AFTER 8 July 2015. Nonetheless, many (700+) published Ombudsman decisions after 1 January 2017 dismissing the complaint indicate that weight, in many cases very significant weight, is given to a commercial decision/judgment of the respondent. For instance, decisions using wording such as the adjudicator/ombudsman “cannot interfere with the way a financial institution exercises it commercial judgement” or that the adjudicator/ombudsman is “reluctant to interfere with a commercial decision” of the financial institution.

I wish to receive information/documentation establishing the basis under Rule DISP 3.6.4 R (or otherwise, if applicable) for the Financial Services Ombudsmen to give any particular weight to the ‘commercial judgment’ of a financial institution, in particular (if such specific information/documentation exists) in the case of an existing customer and an existing service/facility supplied/granted to that customer. In other words, identifying the relevant a) law/regulation b) rule c) code of practice or d) industry practice (including specific details of where that ‘industry practice’ is published or otherwise appears) that indicates that the 'commercial judgment' of a financial institution has any particular relevance in determining what is 'fair and reasonable'.

I am willing initially to consider a narrative (letter form) response to this request.

*****

Alternatively (in the absence of an acceptable narrative response), I make the following request for documentation.

1. Please provide copies of documentation (whether that documentation is in physical or electronic form) sufficient to demonstrate:

1.1. whether the FOS gives any guidance or orientation to decision makers (i.e. adjudicators or Ombudsmen) within the FOS as to whether a financial institutions´s ‘commercial judgment’, ‘commercial decision’ or similar should be given any particular weight in determining (as between the Claimant and the Respondent) what is “fair and reasonable in the circumstances”; and

1.2. If such guidance is given, what it is.

{Note: my concern in this and the following request relates especially to determination of complaints against a financial institution in relation to changes in the provision of existing services already being provided to existing customers, i.e. not in relation to new customer or new business. In the absence of any specific guidance relating to such existing customers/services, please provide details of any general guidance.}

2. Please provide copies of documentation (whether that documentation is in physical or electronic form) sufficient to demonstrate:

2.1. whether and to what extent the FOS is aware of any

2.1.1. law,

2.1.2. rule,

2.1.3. code, or

2.1.4. good industry practice

which mandate or suggest that a bank´s ‘commercial judgment’, ‘commercial decision’ or similar should be given any particular weight in determining (as between the Claimant and the Respondent) what is “fair and reasonable in the circumstances”, including identify the corresponding law, rule, code or good practice and the specific provisions applicable and including (in the case of good industry practice) indicating where that practice is published or otherwise appears.

To the extent any documentation is provided, I request it is provided in electronic format, whatever its original format.

If complying with this request would cause the FOS to exceed the financial limits applicable, I request the assistance of the FOS in narrowing the request.

Thank you for your assistance

Yours faithfully,

Jonathan Barrett

Information Rights Officer, Financial Ombudsman Service Limited

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Dear Financial Ombudsman Service Limited,

Thank you for your encrypted message saying nothing more than that you have received my request.

As per my message through the portal, I request that all replies to my original FOI Act request be sent in an unencrypted format through the whatdotheyknow website. I waive any confidentiality issues in such replies.

Yours faithfully,

Jonathan Barrett

Information Rights Officer, Financial Ombudsman Service Limited

Dear Mr Barrett

Thank you for your emails on the 5 October 2018.

Moving forward, all emails sent to you shall be sent unencrypted, as requested.

Sorry for any inconvenience caused.

Kind regards

Ross Gallagher
Stakeholder team
Financial Ombudsman Service

| PO Box 73208 | London | E14 1QQ
Email: [Financial Ombudsman Service request email]

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Dear Information Rights Officer,

I respectfully remind you that tomorrow, 31 October 2018, is the 'latest possible date' for a substantive response to my request. I also remind you of the ICO´s publication "Time limits for compliance under the
Freedom of Information Act (Section 10)" {https://ico.org.uk/media/for-organisatio..., paragraph 25 of which states:

"It also follows that an authority which provides its response close to, or on, the final day of the 20 working day limit ought to be able to both account for, and justify, the length of time taken to comply with the request."

Please account for, and justify, the length of time taken to comply with my request. Without waiving my rights, if the FOS needs a few further days to finalize its compliance, I might be able to agree to this. However, I do need to know what is the reason for the delay.

Thanks and best wishes

Yours sincerely,

Jonathan Barrett

Information Rights Officer, Financial Ombudsman Service Limited

1 Attachment

Dear Mr Barrett

 

Thank you for your email. We always try to process our response to freedom
of information requests as quickly as we can, but due to the volume of
work our team currently has on, it has taken us the full 20 days to
respond.

 

A copy of our response is attached.

 

Kind regards

 

Stakeholder team

Financial Ombudsman Service | Exchange Tower, London, E14 9SR

 

show quoted sections

Dear Financial Ombudsman Service Limited,

THIS IS A REQUEST FOR:
1) IDENTIFICATION AND PROVISION OF SPECIFIC DOCUMENTS (PARA 5); AND FOR
2) INTERNAL REVIEW OF REFUSAL TO PROVIDE ASSISTANCE IN FORMULATING REQUEST (PARAS 6-8) .

Thank you for your response 31 October 2018, ref FOI 3237. For the reasons in 1-4 below, unfortunately it does not respond to the 3 October request.

1 It is fully understood that an Ombudsman may in many cases conclude that it is “fair and reasonable” not to interfere with a particular commercial decision of a firm, including in the circumstances to which you refer. But the 3 October request seeks to establish whether there is any legal basis for Ombudsmen, as a matter of policy, to be “reluctant” or “unwilling” generally to interfere with commercial decisions, especially in the context of an ongoing and unchanging relationship with a client. In other words, for Ombudsmen to start from a presumption of non-interference, without considering whether the underlying “commercial decision” is in fact fair and reasonable in the circumstances of the dispute.

2 With respect, the response to by 3 October request misdirects itself. That response deals with the Ombudsman´s powers summarily to dismiss a complaint, without consideration of its merits, under DISP Section 3.3. Including summary dismissal where a (full) consideration of the claim would “seriously impair the effective operation of the (FOS)”. A quick electronic search of FOS decisions since 1 January 2017 indicates that (at most) some 12 complaints have been summarily dismissed applying and referring to the “seriously impair” test, on which the 31 October response focuses.

2.1 As a semi-rhetorical question (and without forming part of my FOI request), can you identify any reported Ombudsman determination since 1 January 2017 where it is stated or indicated that a claim concerning a “commercial decision” has been dismissed without consideration of its merits, based on application of any of the provisions of DISP Section 3.3.4A/B? I have looked. I could not find any.

3 In fact, the 3 October request relates to the background to 700 other claims in that period, none of which appear to have been dismissed under DISP Section 3.3. And none appear to make any reference to the “seriously impair” provisions of DISP 3.3.4A/B. Instead, the 700 decisions appear to have been taken after a full determination (under DISP Sections 3.5 and 3.6) of the claim on its merits, on the basis of what was “fair and reasonable”, including pursuant Section 226(2) FSMA 2000. The 3 October FOI request asked for certain documentation relating to such type of determinations under DISP Section 3.6 of what is “fair and reasonable”, and not relating to summary dismissals on the basis of “serious impairment” under DISP Section 3.3.

4 DISP Sections 3.3 and 3.5/3.6 clearly contain separate and distinct procedures, applicable at different stages of a complaint. Tests applying to decisions under one such Section have no relevance to decisions under the other. The factors to be taken into account in determining what is ‘fair and reasonable’ in a (substantive, on the merits) decision under DISP Section 3.6 are set out in DISP 3.6.4R, not in DISP 3.3.4A/B.

Accordingly, the “seriously impair” discussion (relating to DISP Section 3.3) in the 31 October response does not address the issue raised in the 3 October request (relating to DISP Sections 3.5/6). Nor indeed does that response appear to reflect the reality of the “commercial decision” dismissals that have actually been made since 1 January 2017 (see the question in 2.1 above). For these reasons, I do not believe that the narrative response in the 31 October response adequately responds to the 3 October request. Thus, I now continue with my request for documentation.

A) REFINEMENT OF THE 3 OCTOBER REQUEST

5 Without revealing the content of any such documents, please confirm or deny the existence of any documents seeking, giving or relating to any legal advice concerning the formulation and preparation of your response 31 October 2018, ref FOI 3237.

5.1 If any such documents exist, is the FOS willing to waive any legal professional privilege that might attach, without further representation from me (whether as to ‘public interest’, or otherwise)?

Please respond to this refined request (and to 2.1 above) separately from the Request for Internal Review, below.

B) REQUEST FOR INTERNAL REVIEW IN RELATION TO ASSISTANCE FOR FURTHER REFINEMENT

6 The 3 October request asked for documentation “sufficient to identify” e.g. the orientation given to casehandlers (plural) on the matters in question. It was not a request for “all documents”, and would certainly not require any investigation of individual casehandlers / ombudsman e-mails or computers, as referred to in justification in the 31 October reply to the refusal to provide assistance to refine my request. I request an internal review of the FOS´s refusal to offer any guidance to refine the original request made in the 3 October e-mail. I suggest that such guidance can best be explored by direct telephone contact to discuss the possibilities. Matters that could be usefully explored include the following:

a) Those involved in drafting of FOS letter 31 October 2018, ref FOI 3237, can be asked if they are aware of any documents responsive to the 3 October request; and/or
b) The FOS apparently has one or more internal digital knowledge bases available for consultation by casehandlers /ombudsman within the FOS, including the Discovery Intranet portal. A suitably worded electronic search may easily identify responsive documents/information within such knowledge basis.

7 These two items 6 a) – b) are suggestions for areas that could usefully be explored in relation to the provision of assistance in refining the 3 October request. Only the FOS can know how time consuming or otherwise it would be for it to follow-up on any of the indicated items. Obviously, if either of these items would be time consuming for the FOS to pursue, the 3 October request can be refined to focus on the less time consuming item. And in any event, there may be additional or alternative areas that can be explored, e.g.

c) From the tenor of the response 31 October 2018, it seems clear that the FOS has in the past (prior to the 3 October request) received legal advice on the subject matter covered by the 3 October request. There seems no reason why the FOS should not confirm the existence (without revealing the content) of documentation pertaining to such legal advice; and/or
d) Additionally, the FOS apparently has decision support tools (???”Navigator” and “Compass”??) . It may well be that an electronic search of those tools would also readily identify whether they are programmed or otherwise arranged so as refer to or take account of commercial decisions of respondents.

8 In considering this request for internal review, please bear in mind that it seems highly likely that the FOS has at least some responsive documents in relation to my request. It does not appear consistent with its obligations under the FOI Act for the FOS to refuse to conduct any investigation and to refuse to provide any documents whatsoever (i.e. to refuse to provide even a partial response), because it believes that a full investigation/ providing a full response would exceed the financial limits. Put another way, I ask for assistance in formulating a request that will ensure the provision of the most appropriate response, within the applicable financial limits.

Finally, for clarification I should say that I have not reviewed all of the “700” decisions referred to above and in the 3 October FOI request. The comments above are based on a review of a sample of those decisions.

Thank you for your continuing assistance in this matter.

Yours faithfully,

Jonathan Barrett

Information Rights Officer, Financial Ombudsman Service Limited

Dear Jonathan Barrett

Thank you for your email. I’m sorry you’re unhappy with our response to your freedom of information request. We’ll internally review the request and provide you with a response to this review as soon as we’re able to and by no later than 28 November 2018.

Yours sincerely

Stakeholder team
Financial Ombudsman Service

PO Box 73208 | London | E14 1QQ
Email: [Financial Ombudsman Service request email]

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Dear Information Rights Officer,

Please be so kind as to tell me:

1) When the FOS will
a) provide the confirmation or denial of the existence of specified documents, as per Paragraph 5 of my message 1 November, and
b) provide its response to Paragraph 5.1;

and

2) When the FOS will inform me of the results of its Internal Review as per Paragraphs 6-8 of my message 1 November.

Your message 9 November indicated that the FOS would provide responses on these points no later than 28 November.

Yours sincerely,

Jonathan Barrett

Information Rights Officer, Financial Ombudsman Service Limited

1 Attachment

Dear Mr Barrett,

 

We’re sorry about the delay in providing you with our response to your
freedom of information request.

 

Please find it attached.

 

Kindest regards,

 

Stakeholder team

Financial Ombudsman Service | Exchange Tower, London, E14 9SR

 

 

 

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Information Rights Officer, Financial Ombudsman Service Limited

1 Attachment

Dear Mr Barrett,

 

We’re sorry about the delay in providing you with our internal review
response.

 

Please find it attached.

 

Kindest regards,

 

Stakeholder team

Financial Ombudsman Service | Exchange Tower, London, E14 9SR

 

 

 

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Dear Information Rights Officer,

Thank you for your letter of 4th December.

I am afraid that I do not agree that the FOS has provided the required advice and assistance in the formulation or my request, or has otherwise complied with its obligations under the FOI Act.

1 I note that the FOS has neither confirmed nor denied the existence of any documents covered by item 5 of my 1 November message. Of course, I understand this may be an oversight. If no such documents exist, please let me know within 7 days.

a. For clarification, Item 5 of my 1 November message asked: “Without revealing the content of any such documents, please confirm or deny the existence of any documents seeking, giving or relating to any legal advice concerning the formulation and preparation of your response 31 October 2018, ref FOI 3237”

2 The FOS´ reply ref FOI 3237 dated 31 October 2018 states “In some cases, it’s obvious from the outset that the complaint is purely about commercial judgment, in which case we might exercise the discretion to dismiss on the basis that it seriously impairs our effective function to consider such matters”.

I wish to know if there are any specific cases/decisions to which this part of the reply refers, or if it is just a general hypothetical statement made without any specific known factual basis. Accordingly (and bearing in mind that my original request related only to decisions after 1 January 2017) in relation to the cases there referred to, please provide the following documents to the extent they are known or available to any individual involved in the drafting of this statement:

a. A copy of the relevant part of any adjudicator´s decision dismissing any claim pursuant to DISP Rule 3.3.4A(5) because, in the opinion of the adjudicator as expressed in that decision (or as otherwise known to the individual concerned in the drafting the corresponding part of the FOS´ reply ref FOI 3237 dated 31 October 2018) it would “seriously impair the effective operation of the Financial Ombudsman Service” to determine a claim “purely about commercial judgment” or about a “commercial decision” (or similar) of a respondent. By ‘relevant part’ I mean the part of the decision indicating the basis on which the Claim was dismissed. Alternatively, I would of course accept a full copy of that decision.

b. A copy of, or alternatively precise directions to the information so that it can be found without difficulty, of any such decision of any Ombudsman.

3 In response to your kind invitation to "refine my request in order to bring it within the appropriate limit by describing where you’d like us to carry out a search", please let me know whether any information covered by item 1 (including 1.1 and 1.2) of my original request for documentation has already been identified by, or is otherwise known to, any person involved in the drafting of the FOS´ reply ref FOI 3237 dated 31 October 2018, and if so, please provide copies of that information. To avoid doubt, I am only interested in such documentation as known to the relevant individual that has been applicable since 1 January 2017.

a. For clarification, Item 1 of my original request asked “1. Please provide copies of documentation (whether that documentation is in physical or electronic form) sufficient to demonstrate:
1.1. whether the FOS gives any guidance or orientation to decision makers (i.e. adjudicators or Ombudsmen) within the FOS as to whether a financial institutions´s ‘commercial judgment’, ‘commercial decision’ or similar should be given any particular weight in determining (as between the Claimant and the Respondent) what is “fair and reasonable in the circumstances”; and
1.2. If such guidance is given, what it is.

{Note: my concern in this . . . request relates especially to determination of complaints against a financial institution in relation to changes in the provision of existing services already being provided to existing customers, i.e. not in relation to new customer or new business. In the absence of any specific guidance relating to such existing customers/services, please provide details of any general guidance.}”

Thank you for your continuing assistance in this matter.

Yours sincerely,

Jonathan Barrett

Dear Ms Arasakesary,

My apologies, I have only now noted that you sent two separate replies on 4 December. I registered the second reply (ref 3237), but not the first (ref 3313).

Please disregard item 1 of my 7 December message. Items 2 and 3 of that message continue to apply.

In addition, please add a new item, Item 4, as follows:

"4 Please provide copies of any documents seeking, giving or relating to any advice or guidance sought or given concerning the formulation and preparation of the FOS response 31 October 2018, ref FOI 3237."

I am conscious that we are entering the period of end of year holidays. I am quite willing to wait until 25 January 2019 for any further replies on this matter, if that would assist the FOS.

Thank you once again for assistance, and again my apologies for not previously registering you had sent two letters on 4 December.

Yours sincerely,

Jonathan Barrett

Information Rights Officer, Financial Ombudsman Service Limited

Dear Mr Barrett,

Thank you for your email.

I'm sorry you don't think we've addressed all the questions you've asked us - through our internal review. I'm satisfied that we've considered everything you said and so, we don't have anything further that we think we can helpfully add.

So, if you remain unhappy without response, please get in touch with the ICO.

Kind regards,

Stakeholder team

Financial Ombudsman Service | Exchange Tower, London, E14 9SR

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Dear Information Rights Officer,

Thank you for your message 11/12.

As you suggest, the matter has now been referred to the ICO.

Yours sincerely,

Jonathan Barrett

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