It's not uncommon to hear someone suggest there should be a judicial review. 

    This is particularly true where there are issues of concern or regulatory challenge, and we have seen calls for a judicial review during this recent period of change.  

    But what actually is a judicial review? What can be judicially reviewed, and what might be the result?

    As set out in the Civil Procedure rules, a judicial review (commonly shortened to JR by those who charge by the hour) is

    “a claim to review the lawfulness of (i) an enactment or (ii) a decision, action or failure to act in relation to the exercise of the public function.”

    This means a court can examine the decisions of government ministers and departments, industry regulators, local authorities and public bodies to ensure that they act lawfully and fairly. 

    It also includes the decisions of the FCA, the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service (FOS).

    However, the decision needs to be wrong, not just something you might disagree with. 

    The challenges which can be made under a JR fall in to three main categories; that the decision is illegal, irrational or that there has been some procedural impropriety.

    Let's look at each of these categories in turn.


    For a claim to fall under this heading, the decision must have been made outside of the decision maker’s statutory powers and duties. 


    This has been described as applying to “a decision that is so outrageous in its defiance of logic or accepted moral standards that no sensible person who has applied his mind to the question to be decided could have arrived at it.” 

    As you would imagine, it is a pretty high bar in terms of proof.

    Procedural impropriety

    This challenge is concerned with the decision-making process and the requirement for natural justice.  

    It seeks to address whether the right procedure was followed. 

    Were the appropriate people consulted, and were the correct issues taken into account?

    The court can make various orders if a JR is successful.

    It can quash the previous decision, meaning the decision maker may need to make the decision again.

    It can prohibit the decision maker from acting beyond the scope of its powers, and can mandate them to exercise their powers, which is usually the case where they have failed to act.

    Alternatively, the court can make a declaration about the respective rights and obligations of each party.  

    It's really important to bear in mind that the court will not ordinarily make an order substituting the wrong decision with the 'right' one. 

    A JR is an application of last resort, and the courts will expect claimants to have exhausted all other avenues before allowing an application to proceed. 

    This means that few JRs are brought against the FCA, as most of these challenges follow the statutory route via the Upper Tribunal instead.

    Recent challenges

    The FOS has been on the receiving end of a number of high-profile judicial review challenges in recent years. 

    One example is the Berkeley Burke Sipp Administration challenge, regarding the FOS’s decision to hold it liable for failing to prevent a client from investing in a green oil scam. 

    Berkeley Burke challenged the lawfulness of that decision.

    The provider argued the ombudsman had acted illegally by imposing a new and unexpected duty on Sipp providers to investigate clients' investments and to refuse, where appropriate, to carry out the investment.

    Berkeley Burke also argued this could not be balanced with the best execution obligation. 

    The court dismissed the application on the basis that the FOS had a wide-reaching jurisdiction, and was entitled to uphold a complaint based on the FCA's high-level principles, even if no rule had been breached. 

    In respect of the best execution rule, the court held that this was relevant to the way transactions are processed, rather than an obligation to process orders regardless of the investment.

    The FSCS has suffered far fewer challenges, the last reported case being back in 2013. 

    This case concerned a Ms Emptage, who owned a property subject to a repayment mortgage with an outstanding balance of around £40,000.

    She had been advised by her mortgage broker to remortgage with an interest-only mortgage for £110,000, and to buy a Spanish property to service and pay off her mortgage and provide a surplus.

    Following the collapse of the Spanish property market the property became worthless, leaving her with no means of repaying her mortgage.

    The FSCS agreed she had received negligent advice, but said it could only pay compensation for losses arising from the unsuitable regulated mortgage contract.

    It said it wouldn't cover losses from the Spanish property purchase, as this was unregulated business.

    The court disagreed and held that the loss suffered by Ms Emptage flowed from the bad advice in relation to mortgaging her home, which was a regulated activity.

    As a result, the FSCS had the power to pay fair compensation in respect of that loss.

    It's worth noting the court did not order the FSCS to pay compensation to Ms Emptage, but instead that the FSCS must reconsider its decision.

    A high hurdle

    Pursuing a JR is a difficult road. The vast majority of applications will be prevented from continuing for failure to disclose an 'arguable' case.

    Many applications will be withdrawn, and some will be settled. 

    Those that do continue face a high hurdle to prove that the decision was wrong. 

    Yet Lord Hoffmann, a life peer and senior retired judge, had this to say about judicial reviews:

    “The principles of judicial review give effect to the rule of law. They ensure that administrative decisions will be taken rationally, in accordance with a fair procedure and within the powers conferred by Parliament.”

    So the ability of individuals to challenge the decisions of public bodies remains an integral part of our constitution, and of the rule of law.

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