The High Court has remitted Nicholas and Brigid Smith’s complaint against Ulster Bank Ireland Limited to the Financial Services Ombudsman for fresh consideration, finding that the Ombudsman’s refusal to hold an oral hearing was a serious procedural error.
Mr Justice Barrett’s judgment, delivered on 4 February 2014, concerned an appeal under section 57CL of the Central Bank Act 1942. The Ombudsman had found on 28 May 2012 that the Smiths’ complaint was not substantiated and that an oral hearing was unnecessary.
The complaint arose from the Smiths’ investment in the Jubilee Consortium, which used investor funds and loans to buy properties in England. The judgment records that they invested on 7 March 2005 and later suffered significant losses. The Smiths alleged that the bank had advised or recommended the investment and that they relied on its advice. Ulster Bank said it acted as a third-party broker, introduced them to BDO Simpson Xavier, and that the Smiths communicated directly with BDO.
The parties disputed what advice the bank gave before the investment, whether the Smiths had meaningful contact with a bank relationship manager, and whether they received the investment memorandum and warnings about risk in advance. The judge noted that the bank’s records did not include notes of discussions between its two relationship managers, and that the available material did not establish when the memorandum reached the Smiths. The Ombudsman had concluded that the conflicting accounts could be resolved from documents.
Mr Justice Barrett held that the documentary record could not resolve the disputed issues. Without an oral hearing, the Smiths had no opportunity to test the accounts through cross-examination, although resolving those matters was necessary for them to establish their case. The judge concluded that this denied them a fair opportunity and vitiated the Ombudsman’s finding. He said the Ombudsman’s specialist expertise in financial services did not require deference on the procedural question of whether a hearing was needed.
The court ordered the complaint remitted to the Ombudsman for fresh consideration. The judge expressly said it was not his function to decide, and he had no view on, the ultimate merits of the complaint. The order did not determine whether the bank had given unsuitable advice or whether the Smiths were entitled to any remedy.