Assurant General Insurance Limited, R (on the application of) v Financial Ombudsman Service Limited & Ors

The Financial Services and Markets Act 2000 (“FSMA”) establishes the Financial Ombudsman Service Ltd (“FOS”), the first Respondent to this appeal, and sets the limits of when the FOS has jurisdiction to consider a complaint made to it.

The second to fifth Respondents were consumers, who used well-known home-shopping catalogues to make purchases many years ago. Each took advantage of the retailer’s credit facilities to spread payment for their purchases, and were sold a payment protection insurance (“PPI”) policy to cover that credit arrangement. They have complained to the FOS that they were mis-sold the PPI. At the time, the retailers were not directly subject to statutory financial services regulation in respect of selling insurance (the position has since changed). However, the PPI policies were underwritten by a company now known as Assurant General Insurance Ltd (“Assurant” or “the Appellant”), which was the Claimant for judicial review in these proceedings.

By those proceedings the Appellant challenged four jurisdiction decisions taken by an Ombudsman of the FOS, Jan Ferrari, each dated 26 October 2021 (“the Jurisdiction Decisions”) under the FSMA. The Ombudsman decided to accept the individuals’ complaints against Assurant, on the basis that the acts complained about were carried out by a party that was Assurant’s agent (“the retailer”). The Ombudsman has so far reached a view on jurisdiction only and has not yet determined the merits of the complaints.

In a judgment given on 2 November 2022 Collins Rice J (“the Judge”) dismissed the Appellant’s claim for judicial review. With the permission of Males LJ, the Appellant now appeals against that decision. The FOS has submitted a Respondent’s Notice, inviting this Court to uphold the Judge’s decision on alternative grounds if it is necessary to do so.

The Appellant submits, first, that the Judge was wrong to conclude that the court would not consider the question of jurisdiction itself but would only review the FOS’s decision on public law principles, with the consequence that the Judge did not construe the agreements that existed between Assurant and the retailers. The Appellant also submits that the FOS was wrong to find that it did have jurisdiction: the Appellant submits that, on the true construction of the agreements between them, the retailers were not acting as its agents when they sold the PPI policies to the consumers.

At the hearing before this Court we heard submissions from Saima Hanif KC, who appeared with Tom Rainsbury for the Appellant, and James Strachan KC, who appeared for the first Respondent. I express the Court’s gratitude to them all for their written and oral submissions.

Part XVI of the FSMA establishes an Ombudsman scheme for the resolution of disputes between authorised firms in the financial services industry and their customers.

The FOS has two jurisdictions: a compulsory jurisdiction and a voluntary jurisdiction. The present case concerns the compulsory jurisdiction.

Section 225(1) of the FSMA states that the relevant part of the Act provides for a scheme under which certain disputes may be resolved “quickly and with minimum formality by an independent person.” The Scheme is referred to in the Act as “the Ombudsman Scheme”. Schedule 17 makes provision in connection with the Ombudsman Scheme and the Scheme operator.

Section 226 of the FSMA provides for the Ombudsman’s compulsory jurisdiction. Subsection (1) provides that a complaint which relates to an act or omission of a person (“the respondent”) in carrying on an activity to which compulsory jurisdiction rules apply is to be dealt with under the Ombudsman Scheme if the conditions mentioned in subsection (2) are satisfied.

The conditions in subsection (2) are that (a) the complainant is eligible and wishes to have the complaint dealt with under the Scheme; (b) the respondent was an authorised person at the time of the act or omission to which the complaint relates; and (c) the act or omission to which the complaint relates occurred at a time when compulsory jurisdiction rules were in force in relation to the activity in question.

Ms Hanif submits that the conditions which are set out in section 226 are objective conditions and go to the jurisdiction of the Ombudsman. She contrasts them with other provisions in the FSMA which are expressed in subjective language: see e.g. section 228(2), which provides that a complaint is to be determined by reference to what is “in the opinion of the Ombudsman” fair and reasonable in all the circumstances of the case. See also section 229(2)(a), which provides that, if a complaint which has been dealt with under the Scheme is determined in favour of the complainant, the determination may include an award against the respondent “of such amount as the Ombudsman considers fair compensation for loss or damage” suffered by the complainant; and section 230(4), which refers to “the opinion of the Ombudsman” in relation to costs.

The rules for the purposes of section 226 are made by the Financial Conduct Authority pursuant to para. 2(3)(a) of Schedule 17 to the FSMA. In contrast, the procedural rules are made by the FOS itself, under para. 14(1) of Schedule 17, which states that the Scheme operator must make rules to set out the procedure for reference of complaints and for their investigation, consideration and determination by an Ombudsman.

The Dispute Resolution Scheme is set out in a document known as “DISP”. The way in which DISP is drafted is that certain paragraphs have the initial R against them which denotes that they set out a rule, whereas other paragraphs have the letter G, which denotes that they set out guidance.

Chapter 2 addresses the jurisdiction of the FOS. Para. 2.1.4G, which is headed ‘Interpretation’, states that, in this chapter, “carrying on an activity” includes (1) offering, providing or failing to provide a service in relation to an activity; (2) administering or failing to administer a service in relation to an activity; and (3) the manner in which a respondent has administered its business, provided that the business is an activity subject to the FOS’s jurisdiction.

Para. 2.3.1R provides that the Ombudsman can consider a complaint under the compulsory jurisdiction if it relates to an act or omission by a firm in carrying on one or more of the following activities, which include, at sub-para. (1), regulated activities (other than auction regulation bidding and administering a benchmark). Para. 2.3.3G states that complaints about acts or omissions include those in respect of activities for which the firm is responsible (including business of any appointed representative or agent for which the firm has accepted responsibility). It is that reference to agency in particular which is relevant in the present case.

Chapter 3 of DISP addresses complaint handling procedures of the FOS. Section 3.2 concerns jurisdiction. Para. 3.2.1R states that the Ombudsman will have regard to whether a complaint is out of jurisdiction. Para. 3.2.3R states that, where the respondent alleges that the complaint is out of jurisdiction, the Ombudsman will give both parties an opportunity to make representations before he decides. Para. 3.2.4R states that, where the Ombudsman considers that the complaint may be out of jurisdiction, he will give the complainant an opportunity to make representations before he decides. Paras. 3.2.5R and 3.2.6R provide that the Ombudsman will inform the relevant party and give reasons for a decision that the complaint is, or as the case may be is not, out of jurisdiction.

Mr Strachan emphasised before this Court that para. 3.5.1R states that the Ombudsman will attempt to resolve complaints “at the earliest possible stage and by whatever means appear to him to be most appropriate, including mediation or investigation.” He submits that this is consistent with the fundamental nature of the scheme, which is intended to give consumers access to resolution of their complaints which is relatively informal, speedy and inexpensive. It should not therefore be over-judicialised.

There are four Jurisdiction Decisions under challenge in these proceedings. We were taken through one in particular by way of example, that concerning Miss L Evans.

Mrs R Gooding made a complaint in respect of a PPI policy which she was sold by Express Gifts Ltd, trading as Studio in June 2000.

Mrs J Manley complained that she was mis-sold a PPI policy by Freemans plc in October 2003.

Mrs E Bradley complained that she was mis-sold a PPI policy by Express Gifts Ltd, trading as Studio in August 2004.

Each of the decisions was in similar terms to the decision of Miss Evans, to which I now turn in more detail.

Miss Evans complained that she had been mis-sold PPI by Grattan plc (“Grattan”) in November 2004. She said that the PPI was mis-sold because she had health problems at the time of the sale, which would have limited her ability to benefit from the policy but this had not been explained to her.

The PPI was underwritten by a company then known as Bankers Insurance Company Ltd, which is now known as Assurant. Assurant had in the past accepted that the FOS could look at complaints against it in cases where the policy was sold in similar circumstances but, in April 2016, Assurant advised the FOS that it had re-evaluated the legal position on all PPI programmes in which it was involved before the regulation of insurance intermediation by the then Financial Services Authority (“FSA”).

Insurance intermediation only became regulated by the FSA on 14 January 2005. Ms E had taken out the PPI in November 2004, at which point the seller did not have to be a member of the scheme or one of the former schemes (for example the General Insurance Standards Council or “GISC” Scheme) because most of these were voluntary. Accordingly, the Ombudsman concluded that she could not consider the complaint against Grattan itself but she went on to consider whether she could consider a complaint against Assurant on the ground that Grattan was acting as its agent when it sold the PPI to Miss Evans.

At para. 13 of her decision, the Ombudsman noted that she had a copy of an Insurance Agreement dated 1 July 2001 (“the Grattan agreement”). This included a copy of the PPI policy terms and conditions, which in turn referred to a “master policy” also dated 1 July 2001. I will refer to those documents insofar as they are available to the Court later.

As the Ombudsman observed at para. 22, the evidence available from the time of the sale is limited. As the agreement she had before her pre-dated the sale to Miss Evans by three years, she could not be certain whether that document showed the terms that would have been presented to Miss Evans and, further, the evidential value of the master policy was necessarily limited by the fact that the actual document was not available. Nevertheless it did demonstrate the existence of a master policy.

The Ombudsman received lengthy and detailed submissions on behalf of Assurant, contesting the issue of agency, including reference to the textbook Bowstead and Reynolds on Agency and to case law. At para. 24, the Ombudsman accepted that there were arguments in favour of Assurant’s submission and acknowledged that there was no express agency clause to appoint Grattan in a general sense as Assurant’s agent. Nevertheless, looking at the agreement as a whole, she concluded, on balance, that it did amount to an implied agency arrangement which extended to Grattan’s marketing and selling of the insurance cover to consumers. She referred to the relevant legal principles and set out the reasons for her conclusion in detail.

In the course of her decision the Ombudsman took account of the terms of another agreement, known in these proceedings as “the Door-to-Door Parcel Cover Agreement”. She considered that in substance the terms of that agreement were very similar to those of the Grattan agreement, the main difference being that the former did expressly refer to an agency relationship whereas the latter did not. Since, however, the question is one of substance and not form, the Ombudsman concluded that the agreements were intended to operate in largely the same way and this gave further weight to her views about the Grattan agreement.

The Judge recognised, at para. 11, that, in general, a court undertaking judicial review of a public authority’s decisions will take a different approach to questions of law and questions of fact. She said that, if an error of law is alleged, “a court must make up its own mind about what the law is, and decide whether there has been an error accordingly.” She also recognised, at para. 12, that matters are less simple when a question arises as to a matter of fact which goes to an authority’s jurisdiction. In that case she said:

Having considered the relevant case law, which I will address below, the Judge was particularly influenced by what she called the “iterative approach” to determination of the FOS’s jurisdiction. She said, at para. 24:

The Judge then turned to apply that approach to the present case. She acknowledged that the question of whether there was an agency in this context was “undoubtedly a determinative jurisdictional question”: see para. 31. But she did not regard it as being in the same category as questions such as whether a complainant is eligible to complain or did so in time. Rather, at para. 33, she said that whether a relationship of agency exists or not is best characterised as “a mixed question of fact and law.” In the same paragraph, she also said that “a further question of mixed law and fact arises – the correct interpretation of the contract.” Ms Hanif submits that this betrays an error of law in the Judge’s approach, since the interpretation of a contract is a matter of law and not a mixed question of law and fact.

The Judge concluded this section of her judgment, at para. 37, by saying that:

Having then summarised the principles of the law of agency, the Judge considered the decisions under challenge. It is plain, however, that she did not engage in the exercise of construing the contracts in this case herself. Rather she directed herself that “the question for me is whether these decisions disclose error of law or irrationality on the facts”: see para. 53. She said that the challenge was that the law had been misapplied to the contracts “and the conclusion of agency was not properly open to the decision-maker by reference to the law and the contract terms.”: see para. 54. She said that the FOS had not fallen into error and had only taken into account matters to which it was entitled to have regard: see the end of para. 59. In a number of other passages in that section of her judgment, it is plain that the Judge was applying the standard of review which she had already decided was appropriate and that she did not engage in construction of the contracts for herself. For example, at the end of para. 62, she said that:

She concluded this section of her judgment, at para. 64, as follows:

The Appellant advances two grounds of appeal:

I would accept the Appellant’s submissions under Ground 1 to some extent but not completely.

The Judge was right to take the view that, generally speaking, issues of fact are for the Ombudsman to determine, subject to judicial review on conventional grounds such as irrationality or procedural unfairness. This is true even of facts which go to the Ombudsman’s jurisdiction, i.e. “jurisdictional facts”. The mere fact that a fact is a jurisdictional fact does not automatically render it a precedent fact, which has to be established to the satisfaction of the Administrative Court if judicial review proceedings are brought. Professor Paul Craig explains the position as follows in Administrative Law (9^th edition, 2021), at para. 17-031:

Ultimately the issue is one which turns on the correct interpretation of the statute which confers the jurisdiction on the relevant public body: see the decision of the Supreme Court in R (A) v London Borough of Croydon [2009] UKSC 8; [2009] 1 WLR 2557. In that case a contrast was drawn between the concept of a “child”, defined as a person under the age of 18 in the Children Act 1989, which was held to be an objective precedent fact, which had to be proved to the satisfaction of the court; and the concept of a “child in need” for the purpose of engaging a local authority’s duty under section 20(1) of the 1989 Act, which required a number of different value judgments to be made. It was entirely reasonable to assume that Parliament intended such evaluative questions to be determined by the public authority, subject to the control of the courts on ordinary principles of judicial review: see paras. 26-32 (Lady Hale JSC).

In the Croydon case Lady Hale summarised the legal principle as follows, at para. 31:

That passage in Wade and Forsyth, Administrative Law is now to be found in the 12^th edition (2023), at p. 187.

To similar effect Lord Hope DPSC said the following, at para. 52:

As Lord Hope mentioned there, a well-known example of a precedent fact was the concept of “illegal entrant” in the context of the Secretary of State’s power to detain a person under the Immigration Act 1971: see R v Secretary of State for the Home Department, ex p. Khawaja [1984] AC 74.

It is also important to bear in mind that many questions are not “hard-edged” and call for evaluation on matters of degree and opinion: see e.g. R v Monopolies and Mergers Commission, ex p. South Yorkshire Transport Ltd [1993] 1 WLR 23, at 32 (Lord Mustill). In that case the statutory formula which had to be applied was whether an area was a “substantial part” of the United Kingdom. That was held not to be a “hard-edged” question but one that called for evaluation, a task that was for the primary decision-maker, subject to judicial review on conventional public law grounds.

In the present appeal counsel drew our attention to six decisions of the High Court which have considered the jurisdiction of the FOS. Since one of the reasons why permission to appeal was granted by Males LJ is that the issue of the correct approach which should be taken when the jurisdiction of the FOS is challenged by way of judicial review has not previously been considered by this Court, I will examine each of those decisions. I should stress, however, that it is not the function of this judgment to set out a comprehensive treatise on the subject of jurisdictional facts, either generally or specifically in relation to the FOS. As will become apparent, in my view, the issue of law which arises in this particular case is a relatively narrow one.

The first case is R (Bankole) v Financial Ombudsman Service [2012] EWHC 3555 (Admin). It should be noted that this was an unreserved judgment by Sales J after a hearing at which the claimant appeared in person, although the defendant was represented by counsel. The issue in that case was whether the complaint had been referred to the FOS within the time limit. Sales J considered that it was clear from DISP, and in particular para. 2.2, that the Scheme envisages that it will be the Ombudsman who determines whether or not a complaint is made within the time limit specified in the rules: see para. 15. As he went on to say at para. 20, although the decision is primarily for the FOS, it may be subject to review by the court “on usual judicial review grounds.”

In R (Bluefin Insurance Services Ltd) v Financial Ombudsman Service [2014] EWHC 3413 (Admin); [2015] Bus LR 656 Wilkie J had to consider the question whether the requirement that the complainant must be “eligible” to make a complaint to the FOS was a precedent fact. Having considered a number of earlier decisions, including Croydon and Bankole, Wilkie J concluded that the issue before him was one of precedent fact: see para. 72. However, if he were wrong in that analysis, he continued at para. 73 that he was satisfied that the nature of the decision was such that there was a right or wrong answer. It was not an evaluative issue, to be determined by the FOS subject to the control of the courts on ordinary principles of judicial review. He concluded, at para. 74, that, if the FOS had got the answer to that question wrong, this would necessarily have involved a misdirection in law so as to render the FOS’s decision challengeable by way of judicial review. It should be noted that Wilkie J did not consider that his decision was in conflict with Bankole: at para. 61, he considered that that decision was “wholly correct on the issue he [Sales J] had to decide.”

In R (London Capital Group) v Financial Ombudsman Service [2013] EWHC 2425 (Admin) Leggatt J had to consider whether the FOS had jurisdiction to deal with a complaint about the management of a foreign exchange trading account. This issue turned on whether the operation of the account involved dealing in contracts for differences or investments of a similar kind which are regulated under the FSMA. In the course of his judgment Leggatt J analysed at length the terms of the contract in that case. It is also clear that he performed the usual judicial task of arriving at the true interpretation of that contract. Ms Hanif submits that it is implicit that Leggatt J (rightly) regarded the question of the correct construction of a contract going to the FOS’s jurisdiction as being a question of law and therefore one which the court itself had to decide. In my judgment that is plainly correct.

To similar effect is the decision of HHJ Walden-Smith, sitting as a judge of the High Court, in R (TF Global Markets (UK) Ltd) v Financial Ombudsman Service [2020] EWHC 3178 (Admin). In her judgment, at paras. 29-31 and 42-45, it is clear that the task which the Judge in that case performed was the conventional one of interpretation of the relevant contract for herself.

I have found particularly helpful the judgment of Ouseley J in R (Chancery (UK) LLP) v Financial Ombudsman Service [2015] EWHC 407 (Admin). At para. 66, Ouseley J said:

At para. 69, Ouseley J considered that Bankole was rightly decided because it concerned the FOS’s judgment on a procedural aspect of a complaint and Parliament cannot have intended that the question of whether a complaint was made to the FOS on one day or another was for determination anew by the High Court. He considered that Bankole was distinguishable from Bluefin, where the issue was far from a procedural one and, if the FOS were wrong, it would be deciding that someone was not eligible on the facts to complain was indeed eligible, and so would be giving itself jurisdiction which it did not have. Ouseley J considered that the language was not so wide or uncertain as to its scope as to put it into the realms of the South Yorkshire Transport case.

Importantly, at para. 70, Ouseley J made it clear that this does not mean that the court should itself engage in the primary fact-finding exercise. He said:

At paras. 71-72, Ouseley J continued:

In Chancery itself the main question for the Court was whether the giving of tax advice was within the jurisdiction of the FOS. The submission was made on behalf of the claimant that the giving of tax advice was not within its jurisdiction even if the product recommended for tax reasons was a specified investment: see para. 82 in the judgment of Ouseley J. It was submitted that the nature of the advice was “essentially a factual issue”: see para. 83. It was, however, submitted that it was a jurisdictional fact: see para. 85. It was further submitted that the conclusion reached by the FOS was simply not open to it on the facts: see para. 85. Ouseley J rejected the contention on behalf of the claimant in that case. He was of the view that there is “no necessary sharp distinction requiring advice to be pigeonholed as one or the other”, as between tax advice and investment advice; nor could such a distinction be sensibly drawn where there are mixed reasons behind advice: see para. 93. He concluded that the FOS had not erred in its approach: see para. 96.

Finally, we were referred to the decision of Ouseley J in R (TenetConnect Services Ltd) v Financial Ombudsman Service [2018] EWHC 459 (Admin); [2018] 1 BCLC 726, at para. 44, where Ouseley J cited his own judgment in Chancery and summarised the position as follows:

In the present case, I would have no difficulty in general in accepting the submissions made by Mr Strachan on behalf of the Ombudsman that questions of fact are primarily for the Ombudsman to determine, subject only to judicial review on conventional public law grounds. It is important to recall that judicial review is not an appeal. It does not therefore provide an opportunity simply to re-argue a case in front of the High Court. I would endorse what Ouseley J said in Chancery and TenetConnect in the passages I have quoted above, about the respective roles of the FOS and the court on judicial review.

Mr Strachan made it clear before this Court that the FOS accepts that the question of the correct construction of a document, such as a contract, is, on well-established principles, a question of law. It is therefore a question for the court itself to determine.

If authority were needed for that proposition, it can be found in Chatenay v Brazilian Submarine Telegraph Co Ltd [1891] 1 QB 79, at 85, where Lindley LJ said:

In some complaints made to the FOS there may be a relevant dispute as to what are the terms of a contract, in particular where the contract is an oral one or where there are said to be terms which are to be implied into it by reason of the conduct of the parties. Such a dispute concerns questions of fact and, where it arises, I accept Mr Strachan’s submission that the determination of those questions of fact is primarily for the FOS, subject to judicial review on conventional principles of public law. I would also endorse Mr Strachan’s concession that the construction of a document such as a contract is a question of law and must be determined by the court itself. This is not a departure from conventional principles of public law; it is simply an application of them, since one of those principles is that a public authority whose decisions are the subject of judicial review must get the law right.

In the present case, there was no relevant dispute of fact. Certainly none has been drawn to the attention of this Court. In this case, whatever might be said in other cases, the question whether or not there was a relationship of agency between the retailers and Assurant turned in essence on the true construction of the agreements between them. That is a question of law.

The Judge herself said that errors of law fall to be corrected by the court and appears to have appreciated that the construction of a contract is a question of law. She did not, however, apply that appreciation to the present case because she did not engage in the exercise of herself setting out what was the correct construction of the contracts in this case. Her approach was therefore wrong in law.

For those reasons I have reached the conclusion that this Court must embark on the exercise of construing the relevant contracts for itself and answer the question whether there was a relationship of agency between the retailers and Assurant.

The basic characteristics of the relationship of agency are set out as follows in Bowstead and Reynolds on Agency (22^nd ed., 2022), at para.1-001:

That statement, as set out in an earlier edition, was cited with approval by this Court in UBS AG v Kommunale Wasserwerke Leipzig GmbH [2017] EWCA Civ 1567; [2017] 2 CLC 584, at para. 83 (Lord Briggs and Hamblen LJ).

At para. 87, this Court observed that the House of Lords had held in Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130 that the question whether or not a particular relationship is one of agency depends on what the parties have agreed in substance, rather than the label which they choose to place upon it.

At para. 88, this Court referred to the decision of the House of Lords in Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552, describing it as “a heavily fact-based majority decision of the House of Lords about the relationship between a car dealer and a finance company in relation to a hire-purchase transaction”. This Court said that, although it was difficult to derive any clear statement of legal principle from that case, one that did emerge was that:

In the present appeal, Ms Hanif submits that there was no general relationship of agency between the retailers and Assurant but that there was only a specific and limited agency relationship which led to a binding contract of insurance being created between the consumer and Assurant.

Before the FOS and in the High Court Assurant submitted that the retailers in the present case were not its agents in the legal sense but were rather “distributors” of its products. As Bowstead and Reynolds observes, at para. 1-035, suppliers of the goods of a manufacturer, whether on a retail or wholesale basis, who have some form of concession as a regular stockist, distributor or franchisee are often described as “agent”, “selling agent”, “main agent” and the like, for the manufacturer of the goods which they supply. The authors continue that, although it is possible that a distributor is an agent in the common law sense, it is nowadays much more likely that the distributor actually buys from the manufacturer and resells to its own customers.

In the Statement of Facts and Grounds in these judicial review proceedings, at paras. 48-49, it was submitted on behalf of Assurant as follows:

At the hearing before this Court, however, Ms Hanif clarified the position on behalf of Assurant. She conceded that the retailers were agents at least to some extent, since they were able to create a binding relationship between the consumer and Assurant with the consequence that the consumer was able to claim under the insurance policy directly against Assurant.

It is not entirely clear to me what the legal source of that direct relationship between the consumer and Assurant was. This Court does not have before it, nor did the FOS, any example of a document setting out that direct relationship. At the hearing before us Ms Hanif submitted that the source is to be found in the following words which appear on the front page of the Group Master Policy between Freemans plc and Assurant dated 1 August 2001:

That wording seems to me simply to record the agreement between the retailer and Assurant and not to create a contract between the consumer and Assurant. Be that as it may, since Ms Hanif concedes that there was such a contractual relationship between the consumer and Assurant, it is clear that the retailers were agents acting on behalf of Assurant at least for some purposes and were not simply distributors.

This Court was not shown the master policy in each of the cases before us but it was not suggested that there was any material difference between them in this regard.

Similarly, there are some differences between the Insurance Agreements in each of the four cases but it was not suggested that there was any material difference between them. We were taken in detail by Ms Hanif through the Insurance Agreement dated 1 July 2001 between Grattan and “Company”, i.e. Assurant.

In that agreement Grattan, which was the retailer, was referred to as “Customer” but it is clear that this was not a reference to the ultimate consumer.

I will set out the main terms of that agreement, since it is important that it should be interpreted as a whole.

Schedule A to the Agreement, which was headed ‘Details of Insurance Companies’, set out the type of insurance cover provided by the Company, including life, involuntary unemployment and disability insurance.

Clause D of the Agreement, headed ‘Customer Commission’, provided that, in consideration of the services to be performed by the Customer, the Company agreed to pay monthly to the Customer an amount calculated by applying the Customer Commission Rate indicated in Schedule B.

Schedule B to the Agreement, headed ‘Details of Insurance as at 1^st July 2001’, set out the maximum benefits and other details of the Payment Protection Cover provided.

It also set out the “Customer Commission rate”, which in this case provided that the retailer would obtain approximately 42 percent of the premium and Assurant would obtain the remainder.

Clause F of the Agreement, headed ‘Identification of Premiums’, said:

Clause H, headed ‘Exclusivity’, said:

The duties of Assurant (“Company”) were set out in Clause B as follows:

The duties of the retailer, Grattan (“Customer”), were set out in Clause C as follows:

Clause M, ‘Ownership of Expirations’, stated:

Clause O, headed ‘Inspection of Records’, provided:

Clause T provided as follows:

Clause V provided as follows:

Although it was not suggested that there is any material difference between the Insurance Agreements in each of the four cases before this Court, we were shown some of those differences by reference to the agreement between Assurant and Express Gifts dated 1 July 2002. In particular, Clause E made it express that Express Gifts had to hold all premiums received for the Company, less expense reimbursement, “on trust for Company at all times.” In my view, this simply made express the fiduciary relationship which was implicit in the Grattan agreement.

The reference to “expense reimbursement” was in substance a reference to what was called Customer Commission in the Grattan agreement: see Clause D, which in turn referred to Schedule A.

Schedule A provided that the retailer was to receive 75 percent of the premium and Assurant the rest.

Ms Hanif drew our attention to the Profit Share Plan Addendum, at Addendum A. She submitted that the retailer was in fact to receive over 95 percent of the premium by reference to a table set out there. However, as Mr Strachan pointed out, this was a percentage of “Earned Premiums”. That term was defined in Clause A.4 of Addendum A as meaning “that portion of Net Written Premiums attributable to policies whose coverage expired during the Accounting Period.” In other words that was to do with insurance policies which would not in fact lead to anything having to be paid by Assurant because no claim could now be made under them.

In any event, as Mr Strachan reminds this Court, the fact that very high percentages of income were receivable by the retailers is itself a potentially worrying indicator of mis-selling of PPI policies. Whereas Ms Hanif submits that no commercial organisation would sensibly enter into a sharing arrangement which meant that it had all the risk but very little of the profit, Mr Strachan points out the fact that two commercial organisations were prepared to negotiate such an arrangement is itself an indicator that it was not expected that Assurant would in fact have to pay under the insurance policies to consumers very often. This was precisely because they were often not able to make a claim because the policies covered matters such as unemployment and disability in circumstances where they were already unemployed or had health problems.

I have reached the conclusion that, on the true construction of the relevant contracts, there was indeed a relationship of agency which was created by them. The retailers did act as agents for Assurant in selling the insurance policies to the consumers.

As I have mentioned, in an important development at the hearing of this appeal, Ms Hanif accepted on behalf of the Appellant that there was a relationship of agency to some extent. In a concession which was, in my view, correctly made, she accepted that the retailer had the authority to affect the legal relations of third parties, in the sense that it was able to create a contract between the consumer and Assurant so that Assurant was bound to provide insurance cover to the consumer and, if it breached that agreement, the consumer would be able to claim under the insurance policy against Assurant directly.

Nevertheless, Ms Hanif submits that this does not mean that the retailers were acting as agents for Assurant when it came to the critical acts or omissions about which complaint is made to the FOS, in particular the act of actually selling the insurance policies.

I am unable to accept that submission. First, the way in which the retailers created the relationship between the consumer and Assurant (which Ms Hanif now accepts they did as agents for Assurant) was precisely by selling the insurance policies.

Secondly, analysis of the various terms of the insurance agreements in this case leads to the conclusion that they did create (by implication although not expressly) a relationship of agency between the retailers and Assurant when it came to the act of selling the insurance policies to consumers. I accept Mr Strachan’s submission that the relationship created by the insurance agreements in this case had all the indicators of a relationship of agency, as set out in Bowstead and Reynolds on Agency. The main indicators are as follows.

First, there was a large degree of control exercised by Assurant over the retailers in relation to marketing and other matters.

Secondly, the retailers owed fiduciary duties to Assurant when they received premiums from the consumer and, having taken their agreed share of the payment, had to account for the rest of the money to Assurant.

Thirdly, the retailers were bound to market only Assurant’s insurance policies: there was an exclusive arrangement clause in the agreement: see Clause H.

My view draws some support from Colinvaux & Merkin’s Insurance Contract Law (2023), at para. D-0100, where it is said that:

In the present case, the retailers were clearly not independent brokers or anything like that. They were tied to marketing the insurance policies of Assurant. This again is, in my view, an indicator that the retailers were acting as agents of Assurant when selling those policies to consumers.

The high point of the case for Assurant is that there is a clause in the Insurance Agreements, Clause V-6 in the Grattan and Freemans agreements and Clause X-6 and U-6 in the Express Gifts agreements, which, on one view, appears to exclude the possibility of an agency relationship. There are several difficulties with that interpretation. First, Ms Hanif herself rightly accepts that there was a relationship of agency to some extent. Secondly, the clause when correctly understood appears to be concerned only with excluding a partnership arrangement, as the heading to the clause suggests. Thirdly, the House of Lords made clear in Garnac that the question of agency is one of substance and not form. Whatever label is attached to the agreement between them if in truth there is a relationship of agency between the retailer and Assurant, that objective reality cannot be negated by a clause which appears to contradict that reality.

Finally, I should mention that our attention was drawn by Ms Hanif to the judgment of HHJ Kramer sitting in the County Court at Newcastle-upon-Tyne in Ayton v Assurant General Insurance Limited (14 October 2019). Ms Hanif pointed out that that case concerned an agreement under which the retailer was in fact expressly given authority to bind the defendants to insurance contracts: see para. 23. Even in those circumstances it was held that the retailer acted as Assurant’s agent only for the purposes of binding Assurant to insurance contracts and not for any other purposes and indeed there was no provision that they were, for example, to be marketing agents for the defendants in the sense that they were obliged to promote and seek out a sale of a policy: see para. 25. In my view this can in fact be contrasted with Clause C1 in the Grattan Agreement, as to marketing.

I would therefore dismiss this appeal on Ground 2. In substance I accept Mr Strachan’s submissions in the Respondent’s Notice. I conclude that there was a relationship of agency between the retailers and Assurant and so the FOS was correct to decide that these four complaints fell within its jurisdiction.

For the reasons I have given, which differ from those of the High Court, I would dismiss this appeal.

I agree.

I also agree.