CONRED 1.7 Challenging a consumer redress scheme

Any person (e.g. firms, consumers or their representatives) may apply to the Upper Tribunal for a review of any rules made (see section 404D of the Act). The contact details for the Upper Tribunal are as follows:

The Upper Tribunal (Tax and Chancery Chamber)

5th Floor, Rolls Building

7 Rolls Buildings

Fetter Lane

London EC4A 1NL Tel: 020 7612 9730

Email: [email protected]

The Upper Tribunal is independent of the FCA. Its usual role in relation to financial services is to hear references arising from decision notices or supervisory notices issued by the FCA. However, it has also been given a special role in relation to consumer redress schemes.

The judge presiding at consumer redress scheme proceedings in the Upper Tribunal will be a judge of the High Court, the Court of Appeal or Court of Session (or such other person as may be agreed by the Lord Chief Justice, the Lord President or the Lord Chief Justice of Northern Ireland; and the Senior President of Tribunals) (see section 404D(12) of the Act).

The general rule is that, in determining an application, the Upper Tribunal will apply the principles applicable on an application for judicial review (see section 404D(5) of the Act). Therefore, the Tribunal will consider issues such as:

1. (1)

   whether the FCA has acted within its powers;

2. (2)

   whether the FCA has followed a fair process;

3. (3)

   whether the FCA has specified kinds of redress that are ‘just’; and

4. (4)

   whether the FCA has acted irrationally or unreasonably (e.g. is the amount of time in which firms are given to conduct an investigation unreasonable?).

Nonetheless, in relation to two particular aspects of a consumer redress scheme, the Upper Tribunal will be able to conduct a full merits review to consider whether the FCA’s interpretation of the law was correct (see section 404D(6) and (7) of the Act). These two aspects are:

1. (1)

   any examples that the FCA has set out in the scheme rules of things done, or omitted to be done, that are to be regarded as constituting a failure to comply with a requirement; and

2. (2)

   any matters to be taken into account, or steps to be taken, that the FCA has set out in the scheme rules for the purposes of:

   1. (a)

      assessing evidence as to a failure to comply with a requirement; or

   2. (b)

      determining whether such a failure has caused (or may cause) loss or damage to consumers.

In relation to these two aspects, the FCA is restricted to what a court or Tribunal would do. As such, the Upper Tribunal’s role will be to check whether the FCA came to the correct view.

The detailed rules that govern the practice and procedure to be followed in the Upper Tribunal are available on the Government’s website (https://www.gov.uk/government/publications/upper-tribunal-procedure-rules) and are subject to periodic revision.

The Upper Tribunal may:

1. (1)

   dismiss the application (so that the scheme rules will stand); or

2. (2)

   make an order quashing any rules made under section 404 or any provision of those rules (see section 404D(2) of the Act).

The Upper Tribunal may also award damages to the applicant (see section 404D(10) of the Act).

It is possible to appeal an Upper Tribunal decision to the Court of Appeal on a point of law.