A recent Court of Appeal case, Ulster Bank Ireland DAC v Financial Services and Pensions Ombudsman [2024] IECA 231, considered an appeal by Ulster Bank Ireland DAC (Ulster Bank) of a High Court judgment regarding a Financial Services and Pensions Ombudsman’s (FSPO) decision on tracker mortgages.
High Court Proceedings
Two separate parties (Complainants) switched their mortgages from tracker rates to fixed interest rates with Ulster Bank and were later denied the option to return to tracker rates. The Complainants, unhappy with Ulster Bank’s decision, complained to the FSPO. The FSPO upheld the complaints under section 60(2)(a) and (g) of the Financial Services and Pension Ombudsman Act 2017 (2017 Act), finding Ulster Bank’s conduct contrary to law and otherwise improper. Ulster Bank initiated High Court proceedings appealing the decisions of the FSPO.
In June 2023, the High Court dismissed Ulster Bank’s appeal of the FSPO’s decisions, finding no serious errors in the FSPO’s decisions. Ulster Bank appealed.
Court of Appeal Proceedings
The Court of Appeal (COA) considered the applicable standard of review and the extent of curial deference owed to the FSPO on appeals, particularly regarding contractual interpretation, where it may have a level of knowledge of the cases unavailable to a court. To succeed in an appeal from the FSPO, the appellant must establish that the decision was vitiated by serious and significant error. When applying this test, the appeal court will have regard to the degree of expertise and specialist knowledge of the FSPO (per Ulster Bank Investment Funds Limited [2006] IEHC 323).
In terms of deference to the FSPO, the COA reviewed existing authorities which it found limited curial deference to the particular area and expertise of the decision maker in question. It found that there is less scope for curial deference to the FSPO in the interpretation of contracts.
The COA concluded that the High Court should have conducted its own analysis of the contractual documents without deferring to the FSPO.
Decision
The COA found that the FSPO’s contractual interpretation of the relevant contracts was incorrect. It determined that the Complainants had no contractual entitlement to return to tracker rates after switching to fixed rates. The COA questioned the FSPO’s finding of improper conduct under section 60(2)(g) of the 2017 Act, commenting on the difficulty in establishing the Complainants’ understanding of the contracts in the absence of an oral hearing.
The COA allowed Ulster Bank’s appeal and set aside the FSPO’s decision that Ulster Bank’s conduct was contrary to law under section 60(2)(a) and otherwise improper under section 60(2)(g). The High Court’s direction for repayment of overpaid interest and compensation was also set aside. The COA also ordered the complaints under section 60(2)(g) (conduct was otherwise improper) be remitted to the FSPO for consideration following an oral hearing.
Conclusion
The case provides useful guidance on the level of deference an appeal court should give to the FSPO on reviewing its decision in appeals involving the construction of contracts. Ultimately, the court should reach its own conclusions on the proper construction of the contract. The court must then consider whether the FSPO decision was vitiated by serious and significant error, and in applying this test, curial deference is limited to facts of a specialist or technical nature and not to issues of law.
For more information, please contact Laura Murdock, Paul Convery or your usual William Fry contact.
Contributed by Gail Nohilly and Sarah Plunkett.