Court of Appeal ruling could make Ombudsman powers more flexible

The case ruled the financial ombudsman service need not follow the law; he must merely take account of it when determining what is fair and reasonable.

Pinsent Masons pensions group senior associate Simon Tyler said the appeal case Heather Moor & Edgecomb Ltd v Financial Ombudsman Service means the pensions ombudsman could also have a wider discretion than would apply to a court.

Tyler said: "Current case law says the pension ombudsman must follow the law. however, following the logic of this case he could argue he has freedom to apply a wider discretion in issuing his determination than common law would otherwise allow."

However, Linklaters partner Mark Blyth said the statutory framework for FOS is very different to that of the PO.

He said: "FOS is required to determine complaints by reference to what is in its opinion "fair and reasonable". there is no equivalent statutory provision for the PO.

"Indeed, the judge in this case said that if the statutory framework had simply provided that a complaint was to be determined by FOS then it would have been implicit that it would have to be determined in accordance with the law.

"The ‘fair and reasonable’ approach of FOS in contrast to the PO’s jurisdiction is one of the issues to be grappled with on the merger of FOS and the PO planned over the next few years."