Decisions of the Financial Ombudsman Services

For consumers in dispute with a lender, such as a bank, a complaint to the Financial Ombudsman Service (or FOS) is often the final hurdle. Where an agreement cannot be made between you and the lender, FOS may make a final decision in the matter. If you accept a FOS decision, a lender must follow it.

However, there have been some situations where lenders have tried to stop FOS from enforcing its decisions. See
Cromwell Property Securities Ltd v Financial Ombudsman Service Ltd [2014] VSCA 179;
Mickovski v Financial Ombudsman Service Ltd & Anor [2012] VSCA 185;
Patersons Securities Ltd v Financial Ombudsman Service Ltd [2015] WASC 321.

When can a lender dispute a FOS decision?

A decision handed down on 24 February 2016 in the Supreme Court of Western Australia, Financial Ombudsman Services Ltd v Utopia Financial Services Pty Ltd [2016] WASC 55, may shed some light on the issue.


Case Summary

In 2007, Utopia provided financial advice to a consumer, which suggested she invest money from her self managed superannuation fund into a particular property development. A conflict of interest was found between Utopia and the property developer. The consumer made a complaint to FOS and a decision was made that Utopia had breached its duty and ordered Utopia to pay compensation to the consumer.

Utopia was taken to court by FOS because they did not pay the compensation.

Utopia argued that FOS’ decision was unreasonable, and that no reasonable person could have made that decision, and therefore Utopia was not obligated to pay the compensation.

The obligation was on Utopia to prove that the decision was so unreasonable that no reasonable person could have made that decision. The court found that Utopia failed to do this and ordered Utopia to pay the compensation.


When should a court overturn a FOS decision?

In a 2014 case, a court stated that only where a FOS decision is plainly unjust would it be able to overturn a FOS decision. The court also stated that a court should not become involved if it will undermine the purpose of FOS, which is to save time and money in resolving disputes.

In the Utopia case, the court decided that FOS did what is fair, honest and reasonable and therefore they could not overturn the decision. Previous cases supported this.



For consumers, when FOS makes a decision on your complaint, as long as the decision is made fairly, honestly and reasonably, the lender will not be able to challenge the decision in court, and you can be confident that once you accept the decision, your complaint will be finalised.

If you have received a decision from FOS and you don’t know what you can do, please contact us for advice on 9221 7066.


Michael Duncan