Anita Shtmucke and Matthew Groves: Ombuds(man) – what’s in a name?

The institution of the ombudsman is both universal and idiosyncratic. As we observed in the  book we recently edited and published by Hart titled ‘The Ombudsman in the Modern State’ the institution evolves as government is not static.  Globally, the institution of the ombudsman is a response to the need for government oversight. Ombudsman deal with complaints. Complaints are part of government and governing.  It follows that there will be a need for the institution of the ombudsman for as long as government exists. Just as government continues to evolve, so will those who oversee it.

Yet this universal relentless evolution is idiosyncratic. An example is the recent New Zealand decision of Financial Services Complaints Limited v Chief Ombudsman [2022] NZCA 248. In that decision the New Zealand Court of Appeal reversed the decision of the New Zealand Ombudsman who had decided that the Financial Services Complaints Limited (FSCL) could not use the ombudsman name in connection with its private dispute resolution scheme.  In many jurisdictions around the world this would never even have become a legal issue as most do not have the equivalent of section 28A of the Ombudsman Act 1975 (NZ) which is titled ‘Protection of name’ and which limits the use of the name ‘Ombudsman’ in New Zealand such that no person can use the title  ‘Ombudsman’ without the prior written consent of the New Zealand Chief Ombudsman.

There are a number of points of wider interest raised by this decision including:

  • The original introduction of s28A in 1991 in New Zealand was due to concerns that ‘overuse of the name would lead to confusion and lessening of public understanding of the ombudsman concept and loss of public confidence in the office’. Concerns about the expanding use, and possible misuse, of the ombudsman name have arisen everywhere that the institution operates. Disputes about the proper use of the ombudsman title are not simply about terminology. They also reflect a longstanding question in public law – does public or government power have a quality that is unique, or at least different enough, that its terms, concepts or principles of review cannot or should not be transplanted elsewhere. This is not unlike the so-called “Datafin principle” of judicial review that comes from the famous case of R v Panel on Take-overs and Mergers; Ex parte Datafin plc [1987] QB 815. Datafin extended supervisory review to a private body that exercised a public function, though it carefully left the finer details of any definition of “public function” for another day. The question of whether any extension of the ombudsman name could occur had already been answered by the discretionary power that s28A conferred upon New Zealand’s Ombudsman to grant consent enabling others to use the ombudsman name. The issue that came before the Court of Appeal, for the second time, was whether that should occur for the FSCL.     
  • The decision in Financial Services Complaints Limited v Chief Ombudsman continues the global movement towards the ombudsman no longer being a bolt on or addition to a system of government review. The Court did not question the institution or its operation or the title itself rather confirming the validity and diversity of the institution across public and private complaint handling systems.  Indeed in recognising that the ombudsman institution deals with complaints across citizens and consumers the Court rejected the reasoning of the New Zealand Ombudsman in refusing to consent to allow the FSCL to use the title ‘Ombudsman’ on the basis that it would confuse the public, who might mistake the quite different roles of public and private sector ombudsman. The Court of Appeal found there was no real evidence to suggest that confusion had, or could, occur. In any case, it thought ‘possible confusion could be quickly dispelled’: [2022] NZCA 248, [74]. The different bodies of the ombudsman institution were important, but in an unexpected way. The New Zealand Ombudsman had previously granted permission to other industry bodies to use the ombudsman title, which made the refusal of the similar request of the FSCL hard to defend against claims of irrationality and unreasonableness. The New Zealand Ombudsman emphasised the differences between his office and the FSCL, while the FSCL focused (and succeeded) on the similarities between its work and that of comparable private sector bodies. The Court of Appeal reasoned that any interest of an ultimately commercial entity in the use of the ombudsman title was not ‘particularly strong when viewed only through a commercial lens’ but noted that this private sector ombudsman, like so many of this nature, was supported in part by statute. The Court held that ‘if the statutory purpose of this private scheme is taken into account the interest is much stronger by virtue of the associated public interest in the scheme being available to consumers in the financial services sector’:[89]. This reasoning leaves several wider questions open. What is the level of public interest, if any, in the operation of industry ombudsman bodies that contain no statutory foundation? Once official permission is given for the ombudsman name to be used by bodies located outside government, can it ever be reversed?  

Such points of interest continue to arise after the decision was handed down. In 2020 the Ombudsman (Protection of Name) Act 2020 (NZ) amended section 28A restricting the use of the title Ombudsman except when ‘the Minister’ permits a person to use that name. In Committee, in the New Zealand Parliament the Honorable Andrew Little, the  Minister of Justice stated that:

The motivation for this bill comes from a decision of the Court of Appeal in the last couple of years. The reasoning of the Court of Appeal appears to be that because previous Chief Ombudsmen have granted the use of the name of “ombudsman” to private organisations, then other organisations seeking to use the name should not be denied the market advantage that goes with it. It almost, sort of, requires the Chief Ombudsman to compulsorily or mandatorily give the name, grant the use of the name, that the legislation seeks to actually allow to be protected.

So this takes the power of the decision away from the Chief Ombudsman and puts it in the hands of the Minister, but is very, very clear that it is not expected that this name would be used for anything other than organisations or relevant agencies in the State sector. Therefore, we won’t have this proliferation of various ombudsmen or offices of ombudsmen. The real Office of the Ombudsman will continue to have the importance and gravitas that it now has. On that basis, I think it will make a very important contribution to the pantheon of law change that this Parliament will have achieved.

The amendment to section 28A achieves two outcomes which again raise points of general interest to the place of the Ombudsman institution as a complaint handler. Firstly, the amendment provides the Executive with ultimate control over the title Ombudsman raising the issue of the relationship between the courts, the parliament and the ombudsman institution. This change underscores the vulnerability of the Ombudsman institution in the system of government.  In New Zealand, as in most countries the institution lacks constitutional and other protections. Secondly, the amendment preserves the name ‘Ombudsman’ for the bodies that have already received it in New Zealand.  This limits the use of the title to four bodies – the New Zealand Ombudsman, the Banking Ombudsman Scheme Limited, the Insurance & Financial Services Ombudsman Scheme Incorporated and the Financial Services Complaints Limited.  It is of interest that all three private industry Ombudsman bodies are financial in character.  Of interest as it raises the question as to the role of neoliberalism in the role and function of ombudsman as well as the need for external independent accountability in the financial sector. On this last point we have seen this play out in Australia as the financial ombudsman gain penalty powers akin more to courts than to the traditional role of an ombudsman.

The New Zealand protection of the title Ombudsman may tell a story we do not want to hear – that the complaints mechanism set up to watch over government is a weak and unprotected mechanism of review.  Alternatively, it may be interpreted as confirming the care and level of concern that government will extend in order to protect an institution established to maintain democratic accountability of the government. Perhaps in the midst of these two extremes is the power of the institution – that it treads a path between being captured by government and being protected by government.  If this is the case the New Zealand protection of the title Ombudsman evidences the health and robust adaptability of the institution to the changing needs of government/industry and the citizen/consumer.

A final point can be made about the limited scope of these events from New Zealand. The lengthy litigation and the bespoke amending legislation were all focused on a single aspect of the ombudsman institution – its name. The legislation that introduced the new s28A to New Zealand’s ombudsman legislation was limited and reactive amending statute that sought only to quell the issue sparked by the FSCL. By regulating what we might call the “branding rights” of the ombudsman, that legislation did not address the gendered nature of that name. There is an energetic discussion of the continued relevance of the “man” in ombudsman. At one level, this discussion reflects an overdue reform of the institution so that its name reflects the reality of modern life. The deeper and more important question is the institutional equivalent of the debate we have all experienced about names and pronouns. How we perceive and address people matters. The same applies for institutions. The scholarly debate about how this should apply to the ombudsman, which many think leads to the gender neutral term of “ombuds”, is in its infancy. A notable aspect of the recent legislative changes in New Zealand is how they have embedded use of the gendered terminology. To protect an institution is one thing, but to ossify its outdated aspects is quite another.   

Anita Shtumcke is Dean of the Faculty of Law at the University of Technology Sydney and Matthew Groves is the Alfred Deakin Professor of Law at Deakin University.

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