STOCKBROKING FIRM Davy will this week ask the courts to review a ruling by the Financial Services Ombudsman that it mis-sold investments to a credit union, writes Barry O'Halloran.

Earlier this year, Financial Services Ombudsman Joe Meade ruled that Davy had mis-sold €500,000 worth of perpetual bonds to Enfield Credit Union. The investments' value subsequently fell.

Tomorrow, the firm will ask the commercial division of the High Court to review Mr Meade's decision on the grounds that the process was flawed in a number of ways. Following on from that, the firm will ask the court to quash the ombudsman's ruling.

It is understood that Davy will argue that the way in which Mr Meade carried out his inquiry breached the firm's right to fair procedures and natural justice.

Davy was required to make submissions on the issue to the ombudsman's office, but it is understood that it will claim it had no opportunity to view what had been submitted by Enfield Credit Union. It is understood that Davy will argue that it supplied copies of all its submissions to the credit union, but the ombudsman refused the stockbroker's request that his office direct Enfield to pass on its submissions to the firm.

It is understood that there were material conflicts of evidence between Davy and Enfield regarding the advice that the firm gave to the credit union.

However, it is thought that Davy will claim that, as it did not know what the credit union was saying about the firm, it had no way of rebutting this or mounting a defence to the credit union's allegations.

It is understood that the ombudsman told the firm he did not have the power to direct Enfield to give its submissions to Davy. However, the firm is likely to argue that the ombudsman does have this power, particularly in cases where it is necessary to do so to uphold an individual or organisation's right to a fair hearing.

It is thought that Davy will also argue that the ombudsman refused to give Davy a copy of an expert report on the issue, written by consultant Robert Moynihan and submitted to his office by Enfield Credit Union. The ombudsman says this is a private report, but Davy argues that this is not the case as it was written specifically to support Enfield's case.

Similarly, Davy is likely to argue that Enfield Credit Union submitted a second report criticising Davy's submissions, but the ombudsman's office said it could not give these to the firm.

Davy is set to argue that the case should have been dealt with by an oral hearing, with both parties given the opportunity to make their submissions and have them subject to cross-examination.

Davy believes the ombudsman should have first gone down the route of mediating between it and the credit union, rather than going directly to an investigation and adjudication. Davy may offer other arguments dealing with the ombudsman's powers, the way such investigations are regulated and the approach taken by his office to the case.

The hearing will last three days.