The High Court has reserved judgment on a challenge by insurance company Quinn Direct to the power of the Financial Services Ombudsman to direct it to refund certain charges imposed on customers over a six-year period.
Quinn Direct initiated the action over a decision by ombudsman Joe Meade to direct the company to return a €25 "administration charge" imposed on consumers who transferred motor insurance from one vehicle to another. Mr Meade directed that consumers who had paid such charges in the six years prior to his decision of April 2nd, 2007, should be refunded that money within three months.
The company has disputed the ombudsman's power to make such directions in proceedings that concluded yesterday before Ms Justice Mary Finlay Geoghegan, who reserved judgment.
Mr Meade issued the direction after dealing with a July 2006 complaint by a man that Quinn Direct had overcharged him for a motor insurance policy, had charged him administration charges for transferring insurance from one vehicle to another and also charged him after he cancelled his insurance policy with the firm.
In a decision of April 2nd, 2007, Mr Meade dismissed the complaints of overcharging of policy and of charging for cancellation of insurance. However, he upheld the complaint about the €25 change of vehicle charge and directed Quinn Direct to refund the complainant €50.
The change of vehicle charge complaint was upheld on the basis that there was no advance warning of such a charge in the policy documents issued to them.
Quinn Direct says it accepts the ombudsman's direction was properly given in relation to the particular complainant and, although it disagreed with the €50 amount of the refund, it was content to pay that sum. It also said that an administration fee was at no time levied in addition to a cancellation fee when a policy had been cancelled.
However, it objects to Mr Meade's decision, made on the same date, to direct the insurance firm to identify all change of vehicle €25 charges imposed on customers in the previous six years and to refund those within three months.
Quinn Direct claims the ombudsman has no power to go beyond individual complaints and that he erred in law and misconstrued his powers in making the direction. It also claims the ombudsman has no power to address events predating the start of his tenure in May 2005.
It also complains that the task of reviewing cases would be very onerous and time consuming.
It also contends the ombudsman erred in giving such a direction in light of his finding that a change of vehicle charge was proper if included in a policy. It says the charge was included in a policy document of June 2006.
