Introduction

The case of Assurant General Insurance Ltd) R (On the Application Of) v Financial Ombudsman Service Ltd & Ors ([2023] EWCA Civ 1049) was adjudicated by the England and Wales Court of Appeal (Civil Division) on September 18, 2023. This appeal concerned the jurisdiction of the Financial Ombudsman Service Ltd ("FOS") to handle complaints alleging the mis-selling of Payment Protection Insurance ("PPI") policies. The appellants, Assurant General Insurance Ltd, challenged the FOS's jurisdictional decisions, arguing that the retailers who sold the PPI acted as distributors rather than agents, thereby questioning the FOS's authority to consider the complaints.

The key issues revolved around the interpretation of agency relationships between insurers and retailers, the scope of the FOS's jurisdiction under the Financial Services and Markets Act 2000 ("FSMA"), and the appropriate approach for judicial review of FOS decisions.

Summary of the Judgment

The Court of Appeal upheld the original decision by Collins Rice J, dismissing Assurant's claim for judicial review. The Court affirmed that the FOS had jurisdiction to consider the complaints based on the established agency relationship between Assurant and the retailers. The judgment clarified that questions regarding the existence of an agency relationship are primarily legal in nature and fall within the jurisdiction of the courts to interpret statutory provisions. Consequently, the FOS correctly determined its jurisdiction based on the implied agency arrangements outlined in the contracts between Assurant and the retailers.

Analysis

Precedents Cited

The judgment extensively referenced several key precedents to shape the Court’s understanding of jurisdictional questions and agency relationships:

• R (A) v London Borough of Croydon [2009] UKSC 8: Distinguished between objective precedent facts and evaluative questions, emphasizing statutory construction to define jurisdictional boundaries.
• R (Bluefin Insurance Services Ltd) v Financial Ombudsman Service [2014] EWHC 3413 (Admin): Highlighted that eligibility to complain is a precedent fact requiring judicial determination.
• R (Chancery (UK) LLP) v Financial Ombudsman Service [2015] EWHC 407 (Admin): Reinforced that the court must decide on the correct application of law to facts in jurisdictional matters.
• UBS AG v Kommunale Wasserwerke Leipzig GmbH [2017] EWCA Civ 1567: Supported the definition of agency relationships in insurance contexts.
• Bowstead and Reynolds on Agency (22nd ed., 2022): Provided authoritative definitions and characteristics of agency relationships used by the Court.

Legal Reasoning

The Court's legal reasoning focused on the interpretation of the FSMA regarding the FOS's jurisdiction. It underscored that determining whether an agency relationship exists is a legal question that necessitates judicial interpretation rather than mere factual assessment by the FOS. The Court emphasized that:

• **Agency Relationship:** The agreements between Assurant and the retailers implied an agency relationship, granting the retailers authority to bind Assurant in contracts with consumers.
• **Jurisdictional Facts vs. Precedent Facts:** The Court clarified that not all jurisdictional facts are precedent facts requiring de novo judicial determination. Instead, the existence of an agency relationship is a legal question subject to statutory interpretation.
• **Judicial Review Standards:** The Court rejected the appellants' assertion that the judicial review should have encompassed a full re-examination of the agency relationship. Instead, it held that such determinations should align with established public law principles, focusing on procedural fairness and the correct application of law.
• **Contract Interpretation:** The Court undertook its own interpretation of the contracts between Assurant and the retailers to ascertain the true nature of their relationship, ultimately affirming the existence of an agency relationship.

Impact

This judgment has significant implications for the scope of the FOS's jurisdiction, particularly in cases involving the mis-selling of financial products. By affirming that agency relationships established through contractual agreements extend FOS jurisdiction, the decision ensures that consumers can seek redress against insurers even when the products are sold through third-party retailers. Additionally, it clarifies the boundaries of judicial review concerning agency matters, reinforcing that courts retain the authority to interpret statutory provisions and contractual relationships.

Complex Concepts Simplified

Agency Relationship

An agency relationship exists when one party (the agent) is authorized to act on behalf of another (the principal) to create legal relationships with third parties. In this case, the retailers were deemed agents of Assurant, meaning their actions in selling PPI policies legally bound Assurant to the consumers.

Jurisdictional Facts vs. Precedent Facts

Jurisdictional facts are facts that determine whether a public authority has the power to make a particular decision. Precedent facts are a subtype of jurisdictional facts that the courts must determine independently. The Court clarified that not all jurisdictional facts require courts to re-examine them de novo; instead, some are resolved by the authority unless specifically defined as precedent facts by statute.

Judicial Review

Judicial review is a process by which courts oversee the legality of decisions made by public bodies. It ensures that those bodies act within their legal powers and adhere to principles of fairness and rationality. In this case, the Court reviewed whether the FOS correctly interpreted its jurisdiction based on the agency relationship.

Conclusion

The Court of Appeal's decision in Assurant General Insurance Ltd) R (On the Application Of) v Financial Ombudsman Service Ltd & Ors reinforces the authority of the Financial Ombudsman Service to handle complaints related to PPI mis-selling when an agency relationship exists. By meticulously interpreting the contractual agreements and aligning them with statutory provisions, the Court upheld the FOS's jurisdiction, ensuring that consumers have a robust mechanism for redress. This judgment not only clarifies the delineation of agency relationships in financial services but also delineates the appropriate boundaries for judicial review, thereby contributing to the broader legal framework governing consumer protection and financial regulation.

Legal practitioners and financial service providers must take heed of this precedent, recognizing the critical importance of accurately defining agency relationships within contractual agreements to delineate responsibilities and liabilities clearly. Furthermore, the decision underscores the courts' role in interpreting statutory language and contractual terms to uphold the intended reach of regulatory bodies like the FOS.