The Victorian Court of Appeal has ruled that FOS determinations
are final and not subject to court review, save in exceptional
The insured received a TPD benefit in 1999 as a result of a back
injury, at which time his salary continuance payments ceased. More
than 6 years later, the insured lodged a complaint with FOS arguing
that the salary continuance payments should have continued
notwithstanding the TPD payment. He argued that he was not in fact
totally and permanently disabled.
FOS dismissed the complaint on the basis that more than 6 years
had passed from when the insured should reasonably have known of
all the relevant facts. The complaint therefore fell outside of the
FOS terms of reference. The insured asked the Supreme Court of
Victoria to review the FOS determination.
The insured argued FOS is effectively discharging a public
function and that its decisions should therefore be subject to
judicial review, just as administrative decisions taken by
government bodies are subject to judicial review. That argument was
rejected by the Court which noted that FOS is a private entity,
notwithstanding that it conducts a dispute resolution scheme
specifically approved by ASIC pursuant to the Corporations Act
The Court found that there is a three-way contract between FOS,
the insurer and the insured and that FOS is bound to make
determinations in accordance with the terms of that contract, being
the FOS Terms of Reference. However, the Terms of Reference provide
that the determination will be final. It follows that
determinations are not subject to court review unless tainted by
fraud or dishonesty or a lack of good faith.
In this case, although the Court accepted that the Ombudsman had
made an error in determining that the complaint was excluded by the
Terms of Reference, it was simply an error in the process of
reasoning he adopted. The Ombudsman was not guilty of fraud or a
lack of good faith. Therefore, the decision was not reviewable.
Mickovski v Financial Ombudsman Service
FOS determinations are final and not subject to court review unless
there is evidence of fraud or dishonesty or lack of good faith by
the Ombudsman. In practice, FOS determinations will almost never be
subject to court review.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Contractors and principals should ensure they have appropriate insurance coverage instead of relying on indemnity clauses.
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