High Court considers standing to bring an FSPO Appeal

In Chubb European Group SE v. Financial Services and Pensions Ombudsman [2023] IEHC 74, the High Court set aside a decision of the Financial Services and Pensions Ombudsman (‘FSPO’).

The FSPO had rejected a complaint by an insured that their policy of insurance with Chubb European Group SE (‘Insurer’) should have allowed recovery for business disruption during the Covid 19 pandemic. However, despite this successful outcome for the Insurer, the Insurer appealed the matter to the High Court pursuant to the Financial Services and Pensions Ombudsman Act 2017 (‘the Act ’).

Issues raised before the High Court

The Insurer contended that three contractual interpretation findings by the FSPO in respect of the policy were prejudicial to it on account of similar wording appearing in their other policies and also, as the findings potentially triggered obligations on the Insurer under the Central Bank’s supervisory framework for business interruption insurance.

In particular, the Insurer disputed the finding that a business considered an ‘essential service’, and thus not subject to the requirement to close introduced by the government under covid regulations, was not precluded from making a claim for business interruption under the policy. The Insurer also disagreed with the FSPO interpretation of ‘notifiable disease’ in the policy and its finding that the organism, likely to result in the occurrence of a notifiable disease, did not have to be discovered on the premises for a claim to be permissible under the policy.

Despite these findings against the Insurer, the FSPO held that the insured had failed to provide sufficient evidence to support its claim and the claim was dismissed. The FSPO then argued to the High Court that there is no allowance under the Act for a “winner’s appeal” and as such, the Insurer had no basis, as the successful party, to appeal the FSPO decision.

High Court Decision

The High Court held that while the formal outcome of the FSPO decision may have been in favour of the Insurer, the decision contained a number of findings which were, potentially, prejudicial to its position. As such, the Court held that the Insurer had a bona fide interest in pursuing an appeal. While the Court found it did not have to determine whether the doctrine of precedent applies to FSPO decisions, it was clear that conclusions on the interpretation of a particular form of wording in a policy will represent a persuasive precedent in respect of other complaints based on similarly worded policies. As such, the FSPO must act reasonably, with a general obligation to act consistently.

Furthermore, the Court, in considering the provisions of section 60 of the Act, held that a “decision” of the FSPO is more than simply the outcome of a complaint. Instead, it has a wider meaning, including the grounds for the decision and any directions given to a financial service provider. It follows, the Court held, that the right of appeal is not confined to the outcome of the complaint but also embraces the grounds for that outcome.

The High Court noted that an appeal to a decision of the FSPO is not intended to be a re-examination from the beginning of the merits of the decision, but the Court should not adopt a deferential stance to a decision by the FSPO on a ‘pure’ question of law.

In this instance, the Court held that the FSPO committed serious and significant errors in the approach to contractual interpretation and that there had been a failure to observe fair procedures, such as engaging with the submissions made on behalf of the Insurer and a failure to provide any reasoning for not following the submissions.

The Court set aside the decision of the FSPO, but it refused to make its own de novo assessment of the correct meaning of the policy. However, the decision had the practical effect of ensuring that the impugned decision cannot be relied upon as a precedent, nor can it trigger insurer obligations under the Central Bank’s supervisory framework.

Conclusion

This case highlights the requirement of the FSPO to follow fair procedures and to properly identify the jurisdictional basis of its decisions. The Court, in allowing a ‘winner’s appeal’, also emphasises the importance that can attach to the grounds given in support of a particular outcome, in addition to the outcome itself.