Overturn of regulator’s decision to hear D&O case

The High Court has ruled against the Financial Ombudsman Service for deciding it had jurisdiction to rule on a commercial claim brought against Bluefin.

Wayne Lochner, founder of independent online betting company Betbroker, complained that Bluefin failed to notify insurers of a claim that he had made under a directors’ and officers’ (D&O) policy.

The FOS accepted jurisdiction to consider Lochner’s complaint. But, in a case with significant implications for the insurance world and financial services in general, Bluefin mounted a judicial review challenge to that decision.

Justice Wilkie ruled that the FOS had erred in law when it concluded that Lochner had lodged his complaint as “a consumer”.

Under FOS rules, a consumer is defined as “any natural person acting for purposes outside his trade, business or profession”.

And the judge ruled: “Looking at the purposes for which Mr Lochner was acting in making his complaint to the FOS, there is no proper basis on which the FOS could have concluded that his purposes were outside his trade, business or profession.

“On the contrary, the subject matter of his complaint was wholly concerned with the potential loss arising from lack of insurance cover in respect of a liability which he had incurred in the course of his trade, business or profession.”

The fact that Lochner was a beneficiary under the D&O policy, and had sought to recover his personal loss under its terms, was insufficient to make him a consumer.

“His complaint to the FOS was inextricably linked with his trade, business or profession, in respect of which he was potentially personally liable for alleged wrongful acts,” the judge added.

He concluded: “Mr Lochner did not fall within the compulsory jurisdiction of the FOS as he was not an eligible complainant.

“In the alternative, in concluding that Mr Lochner was an eligible complainant, the FOS misdirected itself in law”.

The judge quashed the FOS’s decision to entertain Lochner’s complaint against Bluefin under the compulsory jurisdiction contained within section 226 of the Financial Services and Markets Act 2000.

Case history

Lochner was facing a misrepresentation claim from Aberdeen Asset Management (AAM). It had invested £500,000 in Betbroker, which later went into administration, Justice Wilkie told London’s High Court.

That claim against Lochner had subsequently been compromised and he had claimed under the D&O policy to recover his loss. However, underwriters refused to pay out on grounds that they had not been notified of the loss until after the policy expired.

Lochner argued that he had notified the loss to Bluefin whilst the policy was still in force and complained to the FOS that, but for the brokers’ failure to promptly pass on that information to the underwriters, he would have been indemnified under the policy.

Upholding the brokers’ case, the judge noted that Betbroker was the holder of the D&O policy, although Lochner was named as an ‘insured person’.

AAM’s claim against him was in respect of his “allegedly wrongful acts” while acting as a director of Betbroker, “in the course of his trade, business or profession”.


An FOS spokeswoman said the regulator would consider the judgment in more detail before deciding whether to appeal.

Asked whether the judgment would mean the FOS stops adjudicating on other commercial claims such as commercial vehicle and property, she said: “These are an isolated set of circumstances, where very specific facts have had a direct effect on the outcome.“

A Bluefin spokesman said: “Through this process Bluefin has been seeking clarity as to the remit of the Financial Ombudsman Service. Bluefin is pleased that the decision of the Administrative Court has provided clarification for the industry on this matter, particularly regarding complainant eligibility.”